FLS - Earnings call transcript Q3 2020

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Operator

Ladies and gentlemen, thank you for standing by, and welcome to the Flowserve Corporation Third Quarter 2020 Earnings Conference Call. [Operator Instructions].

Now it's my pleasure to hand the conference over to your speaker today, Mr. Jay Roueche, Treasurer and Vice President of Investor Relations. Please go ahead, sir.

John Roueche

good and Carmen, you, morning, everyone. Thank you discuss Flowserve's appreciate participating results. in to today call conference XXXX our We third financial quarter

On Officer; this President me Financial Officer. Vice the Scott Chief call Flowserve's Rowe, President morning and and Amy and are Executive Schwetz, Senior Chief with

are will, expectations available statements. and in control. the our company's X, well Following results, which as review on comments, encourage measures flowserve.com fully as earnings Please prepared that, accessible Officer, include earnings audio an replay over beyond risks open contain and his statements be available. we These are call to the And non-GAAP Investor forward-looking Executive our included to press Scott for November to which like Rowe, the We at harbor questions. of this and reported involve our our the non-GAAP a the being reminder, measures to and do webcast, and note prepared also turn materials that as this disclosures and Chief in are safe will website would now based call presentation of uncertainties, XXXX, and With Flowserve's I you our reconciliation both release our for section. of President to forecasts, and and Relations they event is of comments. information as many our on other are call will management

Robert Rowe

morning, our quarter third and Jay, joining good earnings you, everyone. Thank Thank for you Great. call.

dedication on we company continues and Flowserve's demonstrated customers support who facilities unprecedented how to the responding every changing those which each current is markets in commitment change day. Considering COVID-XX impacting XXXX. on Flowserve's truly dramatic a to line the with the scale, is and pleased associates, are and fully way especially our day-to-day front continue I manufacturing and and by our Flowserve global QRCs We on leaders and impact appreciate a run the working basis. our lives end the environment, in our to and

directly Flowserve have operating While implemented to the associates any our policies prevented facilities from Flowserve we the in our year, recurring had quarter. earlier strict we to transmission by in impacted and the during adherence procedures COVID,

pleased are we We remain to outcome, our with safety associates. committed this of and the

disruptions However, protocols and disruption the and it in the ensure continues and customers, several safety an Despite have our on facilities. Mexican efforts and and best facilities. is of within challenged have regions, levels. incremental third our In important manufacturing large quarter, sporadic acknowledge the cause to employees overall safety our investment additional that operations impact productivity cost our our we the to where and and COVID health the were most Indian

continue and to productive. quarter and The are the possible is United and our everything associates the processes we of throughout open and all to rise fourth operational keep in these system COVID related will cases our recent operational States keep to our locations facilities concerning. doing and customers. and safe today, However, in support providing our believe Europe beyond, and We're

the $XX.X decreased we earnings End have of reflect delivered implemented quarter, in financials SG&A adjusted our during like results would Overall, million also pleased million. with are level. Before Amy in covers quarter. a our this $X.X, at solid detail, year. to high the address the our we cost our with to Flowserve $XXX share year-over-year significant earnings expectations. I execution These of per adjusted line actions

structure. of compared to $XXX year's track continue We full ahead million cost-out to last program XXXX our for year cost

from we half from measures savings and these have taken. previously, discretionary communicated we half As about structural actions are

of chain savings productivity savings, our in product higher levels manufacturing In our cost to hard are to working SG&A supply the locations. reduce we through addition maintaining to and

a transformation our revenue in XX to adjusted points Flowserve operating XX.X% margin in the Our on XXXX, decrease operational X.X to versus decline basis deliver solid the limiting million in margins of $XX.X quarter. continues execution, resulting quarter decremental program third

as within capture the implemented manufacturing X.X cost We productivity Flowserve we process enhancement improvement actions, additional margin through initiatives confident more and cost are reductions. are will further product opportunities organization,

million original of Let backlog. me XX.X%, XX%, decreased its equipment quarter. FCD's XX%, SG&A the segment Oil resilient down and decrease bookings gas, the primary aftermarket The XX%, adjusted cost bookings basis and were Aggressive to power XX.X%. point both to and decline original a decline, Despite while point to driven sales primary including respectively. of in million were now point due solid towards of bookings mix and a XX%. were Oil XXX operating million, more our XX.X%. shift the offset FPD's respectively. basis bookings X.X% which as nearly the on drove at percentage in project line XX% $XX sales adjusted operating as decline XX% a XX.X%, turn primarily industries adjusted general equipment. to level year-over-year, drivers than expectations, decline revenue decreased executed adjusted basis in strong in $XX.X of FPD's demonstrating modest approximately income headwind improvement the a increased drivers, to margins actions X.X% gas and one XX% sales third margin awards. and $XX or decrease and operating we in adjusted down were more was XXX XXX SG&A performance a in bookings down a were while by down with performance,

were FCD's channel distribution and industries, by challenged margins operating XX.X%, and has and respectively. impacted declines. the general as XX.X% adjusted Additionally, be within commodity COVID American gross spending been price continues to North

the will backlog confident conversion above typically results second levels. focus we their from quarter and the While reduction, these not margins on am inventory I fourth are our business, execution, quarter reduction drive and third cost expect that

Turning now to bookings.

in a line second with levels was third and represented million generally expected, decline our quarter $XXX As year-over-year. bookings quarter of XX%

which oil million. year's the strong in largest roughly included projects of together totaled XXXX last contrast, $XX as small you award our have in and the quarter By less than quarter the million well As project other material cancellations number activity project a was East On gas represented received $XXX recall, a backlog awards, any as Middle we combined Asia when the medium-sized with $XX sum Pacific and smaller awards. may to note, awards, didn't of million. third in the project we positive in quarter. And third

aftermarket $XXX activity down quarter bookings with remained or expectations. modestly better stable million, Third our XX.X%, modestly below relatively of

turnaround year and safety access. headwinds and face upgrade quarter to maintenance The about continue these delayed bookings X% meet have regulatory productivity prior larger for requirements, typically continue to related and projects, most limitations majority currently activity due and equipment XX% were projects Original to scale $XXX down and million, the to While accounts customers with cohort spend sequentially. the to been XX% and remained of investment of muted which remain XX% challenged. up Large reevaluated. being our in versus site are business

be likely accurately project bookings spending this decisions will year's the to current quarter. largely on level in quarters to the second quarter of and and and customers' market environment. fourth the environment, bookings last Our depend third X we similar first quarter expect XXXX The the of the the over represents status COVID

half COVID year back optimistic bookings to the we We growth what begin that to ahead better see the of in return we Given as we in to am I be next both our inflection the moves in increasingly first know should beyond crisis. project of bookings, aftermarket world today, but bookings an it XXXX. expect

and On that the business. pent-up -- expect side, services demand in growth is and than in the aftermarket this to feel earlier area the for project we parts incur there building

aftermarket XXXX operators for We maintenance and planning events. are are beginning spending to turnaround of see signs as in increased

end me Let served markets. now our address

Our oil continue markets energy COVID and demand. declines the due to be most related in gas impacted to

third and were challenging awards. bookings over presented related XXXX larger quarter IMO project flat a Third to roughly which due $XX upgrade quarter third time, year's million activity. quarter awards that year-over-year to several included declined environment project strong of sequentially. figure the at XXXX compare included Last XX%

oil project million. was awarded our just gas This quarter, and largest in $XX

XX% included X%. Third quarter XX.X% were in quarter, of million $X by were in bookings while down chemical quarter award FPD's decline, driven smaller primarily bookings Pacific. only The one Asia down the FCD's

demand continued petrochemical Our while delay customers investment, to opportunities. growing chemical presents specialty integrated

to Turning power.

While oil as the much power gas market and as declined continues challenged, the it to has not or markets. chemical be

offset partially fossil and fuel and The market quarter of XX.X% the totaling award beverage slowdown bookings includes food year-to-date X.X% up million challenged Asia. the in quarter X.X%, and by lucrative quarter a X.X% small most our driven to respectively. The America. Third year-to-date. are was decline, level and FPD's few in down signs recovery XX.X% market, by includes and North bookings $X XXXX, driven increase significant a continued distribution was continued end $X in which industries digital million FPD's just XX% and awards was distribution third show and up growth FCD's MRO in growth. by of with a

over Finally, for decreased Last $XX large in third XX%. million year's a quarter water representing or project. strong, million particularly desalination our market, $XX smallest bookings Middle was including awards East

base products opportunities, demand for to driving Asian position With America, competitive on America Latin award available in While up delivered and dollar quarters the infrastructure pressure the quarter million continue cost incurred limited to quarter line as was this with as municipal COVID quarter create in currency our and North and year-to-date, seen for markets mobility downturn and lower in XXXX, maintaining our opportunities. has water control desalination, which We from largest in only improving to respectively. of fourth and to quality bookings expect energy X has the significant we has from in has expect near-normal be year-over-year the seeing We're in structure what markets. and $X processing a of Only our to and and backlog stabilized we recovered constant decline project highly believe increase we flood in the other We bookings project aftermarket installed demand. declines included markets opportunities Regionally, X% based North investment bookings all well related have continues. regions. X% in offset potential our winning most spending our to XXXX America, growth third and returned a pricing year. impact focus continue the second third as in third levels, work, saw double-digit

me turn our financial provide to quarter. Let detail I call cover greater results to return in fourth the over before our outlook the for to now Amy

Amy Schwetz

Thanks, Scott, and good morning, everyone.

Flowserve's EPS $X.XX related considering solid, was third totaling we financial included expenses well our of realignment $X.XX. ongoing COVID in FX results line to of as below continued greater quarter and $X.X as charges at the transformation EPS reported detail, Looking Adjusted headwinds. experience

X.X% of X.X%, down down execution. offset Consolidated the $XXX Aftermarket segments FTD's than revenue aftermarket and Third down that year-over-year revenues quarter more which activity, backlog prior range. million of XX% growth sequentially versus of both million with more $XXX offset revenues FCD's on $XXX where sales reduced decrease revenue strong were were flat OE than general in was XX% declined FPD's X.X% down of year. equipment original million strength. X.X%, through

In expected several addition were disruptions customers' that limitations of fall caused of well to facilities. and QRCs delayed to customer turnarounds our further the many as sites, and planned as also our the closures Coast hurricane were accessing for active refinery season Gulf this in our chemical temporary plant

margins. to Turning

respectively. points including at Third basis adjusted and to points FPD basis XX.X%, XXX XXX gross decreased declines quarter XXX FCD, margin and of

$X addition sales, In shift negatively associated revenues margins impacted percentage the as driven to were previously in basis mix point a and to by shift. disruption year's increases also XXX original margins and basis Flowserve's realignment versus a quarter XXX points headwinds the XX.X%, total On again COVID mentioned our a mix to increase reported third to with towards mix COVID equipment last by expenses XXX sites, of our FPD's basis cost third gross quarter. related due a basis, decreased point disruptions and million

the cost down basis SG&A year. the percentage These adjusted sales SG&A, year, due points prior a prior actions aggressive control were million XXX of $XXX actions XXX our we a percentage measures XX.X%, as in points, basis to and brought half we adjusted implemented, of with adjusted or which primarily year. considering a On XX.X% the flat took of million the as first sales Third of our cost was cost $XX.X sequentially. demonstrating decreased reported items relatively to decreased versus flat basis, quarter SG&A

of it basis adjusted approximately adjusted decremental at quarter XX.X%. modestly. declined points of represents Third level, million XX XX.X%. decreased quarter the adjusted adjusted as performance revenues margin million an even operating and income revenue operating segment With decline, versus its year's last margin year-over-year delivered operating third FPD's a to $XX.X $XXX.X growth operating income solid

drove a expect below to XX.X%. lower-margin driven X.X%, in levels and quarter. increase FCD's loss XXX a result, we leverage With operating of margin mid-teen of visibility on driven the in benefit fully margins a margin to to operating XX.X% the was the mix FPD included return of decreased of FCD's quarter lower As to sight, operating its points line basis Reported adjusted modestly adjusted higher lower around clear project third expectations, work. adjusted by our points XXX by revenues basis margin primarily of and items. fourth

cash Turning flow and liquidity. the to

especially year, year the results flow are you half is of Flowserve's cash quarter. seasonal, many As our fourth know, in of the second the traditionally full of delivered in most and

be I about few our and published performance free flow feel of $XX proceeds CapEx have cash feel we of increased Even cash on -- position, well of for XXXX. million as very million. future considering during generation we cash and In million. operating its to our bond cash some the million after a $XXX as statement $XX $XX say to maturities good While quarter. brought million excess the flow be Based quarterly in XX issuance in our retire cash note our to about will This can use with cash flow quarter million $XXX will outstanding the spending, proceeds offer, $XX the our debt, the the balanced Flowserve in XXXX quarter. good XX-Q, net days September periods, and we we net to this at intend cash and tender of Flowserve's issuance, over absent cash equivalents

versus capital percent to larger OE and a few as COVID-related increase of relates assets working well manufacturing million liabilities to This year. facilities. in an primary we in increase primarily the roughly However, $XXX the our a to increased XX% delays due prior including sales grew as contract project inventory, backlog in inventory shipping as of built strong disruptions as

result, As reflect. revenues on might COVID capital impact greater a has negative than had working our a

are metrics despite Over years, sales teams for demand, during improvement blip, capital of Flowserve the the high the the has through upcoming meaningful intensely levels visibility be and we stringently working XX to us DSO incentivized also consistency versus XX confident reduce managing XXXX. more And much and are have transformation track the during improved. quarter's and solid quarter our on first fourth quarter in in demonstrated discrete somewhat performance few cycle than right better has and to we last In to this inventory our points receivable in accordingly. shipments. It we of was quarters delivered our X each the is than challenging critical manage are the growth, Accounts days initiatives. inventory. particular, that we current taking in reflect are of in the measures will inventory to actively the

this the XX still initiatives performance. expect our our we And strong in XX would transformation given competitive enable environment end of will we significant improvement. third the of COVID-driven when improvement Despite years last days made to see for for which impact have we slow target pay us our DSO some of represent in below in year, XXXX. was payment opportunities X the Although days, certain quarter terms markets reach

look our position end and credit total, quarter remains Flowserve. to the $XXX forward express partner nearly In of want the available access liquidity to roughly $XXX third banks of this amended appreciation $X.X to these tender work together. well issuance quarter, to our undrawn. We ongoing increased balance and senior notes credit sequentially to facility during support to million our as amended under cash capacity million $XXX Flowserve million continued thank flexibility provide liquidity. our increased facility, my our and $XXX their addition for also In million I of we billion, to source and includes our value offer as ample relationships which which

cost continued seasonally combined and anticipated capital deliver we With disciplined million from $XXX the strong operations working in the with expect spending discretionary our reduction on progress program, management, fourth improvements, quarter. significant capital cost the cash to

cash including major programs. the guidance, our and with usages prior realignment cost-out expected funding Our consistent actions our remain and transformation in structural XXXX

We dividends capital full annual continue and in range million of year $XX to $XXX expenditures expect million. the roughly

Let me yesterday. a revision with our the disclosed close brief that accounting comment addressing in release we press

change of risk litigation asbestos expectations future First, or our increased the for any to the revision view a cash result to is flow. of not related

related accounting liabilities brands others As aware with quarter close heritage liabilities. became deviated certain potential asbestos procedures, part to for of we similar our to our exposure future that from third

disclosed, were to forecast an actuary liabilities reporting the only known previously not to company. but reported that versus claims were were that as claims incurred, we for Specifically, those possibly using

a total. liability offset as partially of by by million are we coverage carriers. reached As This is insurance received receivable. to our result, is in agreements a $XX proceeds Cash increased insurance $XX from as with $XXX booked million million liability

reflect incurred, on well Our revised the as correction of the financial statements this the not reported sheet other immaterial and filings timing liability, balance as but items.

now me call the to Let return Scott.

Robert Rowe

Amy. you, Thank

year. pleased we this As earlier, I performance our said unprecedented are with in

to and our done The remain We our X.X work are Flowserve our are is downturn committed to X.X managing with the performance. program. positively operational COVID Flowserve impacting efforts and through transformational pandemic we not continue

streams We to and to reduction return and have reprioritized for make due downturn, continue we a cost the progress further steady plans pandemic to certain growth. driven work on preparing

of operating we comprised structural part accelerated. of implemented X.X possible we flexible initiatives million speed, Flowserve midyear XXXX over few structure more planned with previously the model. Most the were as that program $XXX years, last X.X measures the was creating of success which cost In cost fact, versus our the our a Flowserve by of we because reduced

executing In are our downturn to managing we addition growth making COVID progress and strategy initiatives. on our and playbook, long-term our

a effort and our Over end evaluating markets lot the last analyzing our in put XX months, we've product portfolio. of overall

a teams significant This products, put that progress product markets have our years have have liquid third made expect new vapors. and launched through products the SIHI variety the of and attractive for end X to for growth alone, new come. the gases the a branded XX existing we differentiated in products In introductions X-stage and quarter X upgrades have the Included the all year. designed efforts year, several in before a is Our more of of in introduced process. product launched ring new offering to compressor potential product we design-to-value

technology will this product the to proven Our processes reliability This safety, under most compress be the special FPD are operate enables and part of conditions, severe segment. where critical.

We also segment. capabilities new added FCD within the

Valtek as third LNG During chemical compressor using processing, innovative an with This to anti-surge is we launched which compression, natural anti-surge operators revolutionary will provide control refinery anti-surge a a gas solution design responsiveness. gas the fast quarter, combines and gas stations product control and precise natural feedstock. a and valve, plants that

industry. investment we'll been development the in technology. and we actuator. Limitorque solution Control and new new line historically diagnostic the industries Flow has trouble-free provides control our Series IoT-enabled actuator improved This smart Control reliable with in increased Flow process and an in capabilities confidence our in process, commissioning, applications. MX B expanded With our Flowserve Additionally, electric increase to multiple products operation continue from advanced leader innovative product

safer do gas the oil believe recognize gas future in much through XXXX, While about technologies. mix. global that long-term still Today, a in advances XX% With renewables has we energy energy the investment expect energy alternative oil mix, and and mix. involving are reduced XX% major most very the oil represents significant energy vital of we in investment process valves, And we are to pumps, that and and or infrastructure. provide than energy every industrial Nevertheless, conditions. and increasing about gas living the excited gases, emissions liquids virtually global more towards transition, fields to the of services

and maintenance process key services which recovery, and supplier the and downstream issues products solar technology Flowserve process and used increases control and now and production and sector; helping gas better employ industrial address applications to the we corporation, cities like a local hydrogen as government world leadership make energy world maximize place plants carbon . spend our take continues life, [indiscernible] to concentrated to throughout environmental access improve social for ESG. Flowserve's I our in services such for freshwater; from would intensity; the service a in as emissions on desalination advance currently industry, protect environment, as the flood to and reduce reduces workers; hydropower; improve to are to everyone. ESG efficiency innovative and Our seriously. and methane efficiency; carbon minute and cost-effective capture expect in storage efforts, And fully very Flow seawater to participate coastlines in considering program we to or Control a

top almost Our X our program decade when organization with comprehensive people vision excellence. commitment develop first operational released worked together starts to Directors a we evolve ESG management. to report. focused our of We've on a sustainability our program pillars: ESG The for of planet, the senior and began Board ago and at our and

our we improving be continues of access of best diversity, the by governance recently, to shareholders' has to with like to would and for most we believe ability written Today, proactive than and which becoming proxy interest, unanimous implementing as enacting discuss our our our gender aligned Board practices, organization. initiatives implementation focus declassifying more continuously been racial environmental Sustainability report consent. to Directors, published our less and program. our in our best While our on this specifically act evidenced Earlier within our ESG shareholders improving XXXX like commitment to by I we a week, approach

a as emissions XX% We announced XXXX using global baseline. for new by also specifically a target reducing by COX intensity XXXX

to doing utilize reduce will emissions an we our setting the also intend well portfolio own place an customers Flowserve, our setting emissions emissions, both and through ambitious our our cleaner in At -- world actions, are energy targets we new participate believe products help we further a COX to can as existing their big steps our solar energy assisting to developing and that transition ESG of can addition hydroelectric. like towards reduce In target make hydrogen, make just as and and sources that. better we

Let with close fourth me quarter outlook. our

We bookings and be line expect quarter the fourth third in with quarter to second levels.

occur inflection XXXX. upward an bookings anticipating mid-to-late While in to

and progress We our billion expect to converting this make our largest in of deliver year. quarter quarter significant revenue backlog $X fourth the

we the As last our X as have operating plan should deliver quarter be level. the we quarters, strong manage structure. around cost effectively we to XX% decrementals Fourth decrementals margin

last with performance least are Those we quarter finish the year. levels. forecasting the best capital million cash Finally, $XXX are free to for of traditionally in the cash from earnings the the results year of year revenues, during as third flow occurring flow the adjusted primary seasonal set at generation very working fourth of reduced we quarter with the and of quarter

the of higher the than fourth at through with and capture driving that shareholders. trend largely previous to a and remain cycles market position to execute this would reflect downturns our XXXX to I we like to any prepared expect concludes long-term progress Flowserve customers level remarks, any open COVID-related absent recovery, We to will Operator, for growth quarter confident issues. that our associates, questions. and our call value now our transformation continue

Operator

Instructions]. [Operator

Deane from Markets. is question Dray with first Capital RBC Our

Deane Dray

become can are Can it's either delayed safety, about to gas your on threshold? the just that how the MRO point, by oil things upgrades close side? long be start we and how regulatory maintenance we outlook industry? the but At a or MRO expectations with And certain the and

Robert Rowe

the about this that there's still out. what And regulated decisions we imminent the in exceptions that's question. can't discretionary might downturn. progress, is an we recovery -- lot but you prepared out, And some this. that -- you of can sign been that an right we're Yes. operators we're important just where than for the ahead seeing and a there, pushed is by remarks, of make at seeing the are biggest parts failure will XXXX the obviously, would Deane, of rates they my say work In better we're of of be as in talked which spending side the I get bring out truly that it, we're going mandates seeing. us. impact when it's see or you and think even that, just But expect the are to those And that impacted do probably push And this and and I now. on off run that first be normally, hold

don't we share. We do the discretionary there's we market been hard. of just taking -- has others don't so we're really, And losing clamped think think really but think this are down action, been side

that pump and things up that of On they've well. the That side, seal where But pullback. start and area we've is, seals, if to it to we're between seeing a the leak so pump, that. motor the hold got and seen on the parts replace the valve reasonably business some the parts, that's

they're and this we in remarks then half put events in piece, or well -- and bigger in or turnaround looking major activity. -- the about the And talking are prepared to of maintenance-type that just plans so as I think do other is as to the second I customers XXXX

we But discussions helps spending think We're demand. should customers, and there's that big customers with a in having with of do hopefully, confirming -- they're or come top-level our pent-up there. So that up the lot XXXX.

Deane Dray

helpful. of loss. there's share about my you you any market think market really been And questions anticipated don't share, That's one

So inventory ask in the about in channel. channel can I the --

your sense continuum? on destocking what's distributors stocking, about right Just the now the

Robert Rowe

Yes.

there's few that public disclose can business. stocking are the valve you inventory are their and results. And are their our see And in distributors really down So levels a substantially.

And last year. so they came in it the really started --

to that down they've on basis. they're pulling regular said what a destocking orders, and is going they but not are replace been and And so spending right? inventory buy and major they've not to do And stock money, just they're going

don't I but business, you think to also their significant helm is like, done, And destocking their so the awards, mean, dramatically. stock I see in are until anticipate inflection pretty a major pretty I numbers

and that's at our what to major that bookings on and pump many But QX. in going more within -- And the an business bit so activity. actually just a have side, we than and And But way, QX little I of valve the inventory lot that's variables of actually, think in of then we see they're of stocking valves. passed to A they start hold inflection a just I until that inventory. is help uplift not weird think help a it's saw we through as levels, distributors. will our don't not more we're seeing kind

side. a there's big think don't I pump impact on the So

Deane Dray

as Great. and and And revised things of a a, more I on showing scheme in the for it's disclosure that you're against is, got the are issue, assumptions just transparency lastly, insurance the it. good this tiny appreciate it's companies that reserve. you about of comment question of than all, your facing you've asbestos a That

appreciate I like transparency, to a non-issue but us. So looks it the

Amy Schwetz

million is a Thanks, Deane. of exposure on $XX net relatively We it change. immaterial with agree books, currently our

Operator

Our from next Pokrzywinski question is Morgan with Stanley. Joshua

Joshua Pokrzywinski

kind normal And first kind backlog move half? comfortable think, positive, would more then? you following much what needs be the of orders and up relative Deane's likely the the in of maintenance the of Scott, than to I here this and next before done be just and some year depletion as guess, ship of of with on visibility question -- book second your replenishment kind turn kind in and of activity in in timing expect through How the first with half. you'd half of that some backlog comments we of I would on comes

Robert Rowe

And a just Yes. really and hard good COVID. backdrop to it's answer. I is question, really the said, of with it Joshua, one

on the and is I'll outbreak the think And in level can comfort clear say, about when start going the to in I that aggressiveness folks But this Hemisphere the see and some again. we've is, spend kind think direction quarter. so COVID to just we really given on as fall dictate we really Northern of where fourth backlog what pretty

our XXXX. believe some backlog at it to the it's you start again. question number like. And that to the got QX, And you dramatically so whether rates see a starts customers then maybe bill we spend a aftermarket in do I half and the what that to pick can activity of that now. And more QX, know until type wouldn't back to from expect plans But happen. of looks there. there's when versus just having late really we're the spend project -- with to at book And can right we we've And run XXXX. get MRO point and customers, now, then And up becomes discussions spending

this just so a going them kind does a starts this of on demand operators uptick of start this with see And of get and to of folks what lot do guess we think the early a end and then to with and that is And it's vaccines psychology When is I living everything next better my right lot in in QX. return. and handled is in get -- winter be QX And confidence comfortable, to now place COVID I how virus, year believe much at kind gives season. during that mobility happen. the and when just that

out concrete belt, least provide And -- I come at we'll at we provide. we're get end We'll that's on of fourth kind a or And the plans. quarter what what hopefully some, really thinking. can hopefully, our provide direction with of get refined guidance the terms XXXX can little in of XXXX. more so best is, hopeful folks we're And quarter more under another on we their as the

Joshua Pokrzywinski

benefit of range able there of as some hindsight, done, the the if got practices? don't back too frame, and pushed that effect would customer say, you're pieces to Got the I How and to is it. of subject this out, contextualize much to and But of get been sense. then with COVID that this that just a a the want and done know there. thinking and of the to customers? lot we these you lot is That about had again. back a site Or again? 'XX-'XX think to spend, normal big the conversations of snowplow MRO stuff And catch-up And makes getting all magnitude has kind moving teams of kind a management smaller of of pushes then I with didn't that the access I do MRO timing a get into would work time

Robert Rowe

Yes.

with kind I'll of Deane. reiterate I a what I'll just So bit said little --

at and all happened avoid customers. to of discussions having of our understand 'XX the and are that. impact think We what the in 'XX, unanimously, they top level And they I want

to I think the work. working access people COVID of of and it was it difference site and in a here is a was world, that lot with just from the conduct cases, physically home, lot of impossible in parts

the do demand And the operating certainly does and on we side. that that pre-COVID. some our optimistic maintenance side back I'm were MRO return there's think to there, so levels the parts I And pent-up

kind psychological here. I'm so probably that. think XXXX, that And they process on the in and wave again, depend that than things and impact how this industry more then half be whatever supporting growth we're optimistic significantly return the seeing And are But intense is. there on right they're is going would of of do on the demand our it's where winter of that rate to more COVID, discussions, first of in planned now. Again,

And getting about growth XXXX. so feel pretty good within some here we

Operator

next Our Walsh John with Crédit comes Suisse. question from

John Walsh

the I helps sounds products, about year There bridge announcing we that the are were year. actions, next our about case, you're talked understand wanted thinking to be you maybe a just It you margin and tailwinds from what and about as line type which little conceptually them of even was of to us you you a temporary of in I bit some products. to half nature. we the took. pointing about in mean structural. that I think margin next talk think price headwind, seems new because can with another should how demand a think, some creating Half But like into some about it at and walk as new headwinds? help like year-over-year base top least, was

Robert Rowe

you there's to a think it's right? kind No, I'll But things a situation, a of Yes. complicated of -- about. little bit give Sure.

more side, to the would return backlog are aftermarket we bit to And OE. as higher. out The just be right? a one mix so first the The little kind versus OE aftermarket mix of normal obviously starts margins and the get

tailwind a get we'll from mix. that so And

You're $XXX secure. is that -- about million we've that also talked

on get that is say And there. out cost the still then in were very going the I'd all initiatives are you tailwind other just flight. a X.X so thing the before much And Flowserve

made through supply driving time put on value. we've from product the big anywhere so we're on landed a we side, lean. manufacturing And cost be talked on strides this cost our cost more every to And the to on productivity. seeing We chains effective. there, XX% XX% We're product making out of the design about We're strides to overall product.

Flowserve tank And in the X.X. -- lower. obviously, the the terms so revenues in a still of would then left there's headwind are be And lot

that you've and absorption we the one overcome. yet so then overhead other And is pricing. to just And got got about that haven't we've talked

we so I generate to seeing pricing for long in negative and that imminent value large across And would not impact side. particularly can our and we a for we're work. limited accurately things And are on competing an as manner run. projects of more in accordingly in pump the folks everything Flowserve price the the It's it's are say on all business. doing

think miss Did looking I big the one, those I kind I'm are at Amy. levers. Amy? of So

Amy Schwetz

you $XXX only avoidance thing cost in clarify, on the I commented Yes. and The would being structural that XX-XX XXXX. million

only Just months benefit changes. got reminder, the as structural a X about of we of those

rate $XXX pull that into run actually we XXXX, million savings. So forward they anticipate of

Robert Rowe

I'd on place. in plans And Yes. cost QX, put the only a kind and pretty quick at it end the putting then QX, of aggressive -- we reduction say, of thing beginning point really to the is just just our were fine in other of

event little we we backlog side on booking the the differently so cost can in than expect. get know down a out that bit we And our or as comes something goes

And going needs this, and sure continue to be so structure watch where that in XXXX to is to cost beyond. make and we'll it the we're

John Walsh

kind Maybe free the on a Obviously, the think tougher if disclosure What cash forward, flow achieve it's that. thought Great. just I one do did big going a the are little year target headwinds, more same your with conversion. as we that cash from commentary I quarter perspective? flow exercise a you was I this we XXX%, But you bit loaded, the have how you could free little on bit worked. next tailwinds kind the of of way of know into look as remember back-end

Amy Schwetz

strong markets. free that is good a XXXX in generate a Yes. We and cash indication flow think can that good Flowserve challenging

flow. We are seasonal with respect to our cash

just of of cash we're million $XX this indicated, we shy free flow quarter. as So

the or made the free including realistically, the million it year. we've driving of towards those XXXX -- in cash took $XXX that's some the indicated, that year. the there's fourth flow on of we're investments in quarter to business the first rightsize better in numbers, Scott And As weighing of half the cost been

huge to working and a primary see continue capital generation. for working We flow capital cash as lever

in continue where our third As But that's cash really I going percentage year just the think think of as XXX% indicated that and stand focus want a company. cash of close still free to year I in goals. lower the with terms flow we working that's close at where we area to sales, to are opportunity that provide but of number update where strong, out bar landed of we've or percentage inventory. a primary indicated primary as to momentum. in specifically, quarter pick where of would an a conversion And as we And remarks, of drive as we up where we that else, is to with really a And sales. out terms with end in but not we're number be the we capital prepared sit huge that, is to to the that the there's the percentage my initiatives, now, everything down. disappointed we transformation sit capital a focus year. working And flow we and as reset of with respect we as to comment we to for we be drive respect should mid-XXs plan the at Like where to those that

Operator

Kaplowitz Our next question Andy with comes Citigroup. from

Andrew Kaplowitz

I concern markets? larger concern seeing for there's more demand as end give you some are increased a that us into you're couple capacity in longer. out what your think could investor lower could -- of or there Scott, refiners color stays some shutting investor

specialty mentioned you see And refining? chemical more see back? to demand in do risk Do is you under extended beginning come So you recovering. projects of downturn a that then chemical-related aftermarket

Robert Rowe

mean, would Yes, now. Andy. I I agree. right refineries are sure, challenged

largely You the worked utilization as closures can there And haven't that smaller equipment What North the of and I at has they weren't terms And COVID refined the closures, us product announcing the their the like upgrading America But then in well just temporary slowing halt the that announced would frankly, COVID, with it's early spending a in lot same for well. announced that say to closures grounded phases again permanent refineries that. taken as hit now. is numbers. economics down mobility in a -- Europe, and massive of are see quite have that things of have be are with some some the are them. operators would time, and this in has wave and a

opportunities So specialty our system, I look type funnel Flowserve definitely within challenged seeing some think we seen seeing We're markets opportunities moving more We're gases. And the progress. in awards we're you've and chemical. the and at as discussions LNG more more projects in seeing a market. it's forward. And water

seeing of work QX, seeing a lots the think do of in kind I'd to then activity then in around Asia it We're not little of bit going broadly, a more refining continue. of we're essentially in while we XXXX. also kind and refining we of East a of see is half that think I of pre-COVID Asia, little oil-related Asia And more projects think type early, East, than would we're that's market things then lot levels. I'm -- there. that investment that rest fully infrastructure spending Middle picked will the a Asia, say refinery that are it's picking And there feel XXXX. think of Middle in up the I and globally. believe world and more -- outside East the Middle be the up. And definitely the confident and kind I different the progress do China do is there. more and just And to the say so going But thinking the but second And I And see your again, you'll bit that

Andrew Kaplowitz

of there all such of it aftermarket includes you business, today be could and positives how And incremental are on in streams Scott, streams And done of while more XXXX argue helpful. then, -- X.X the Very track like, could improved. the work work that the lean, you've you as you as have difficult and impact seems beyond? it going the as see during Flowserve Flowserve mentioned on that benefits were many And but you've the design Flowserve much improve, growth. and outlined can right One work the to pandemic. operate X.X get mentioned, the value, the to see they in streams

Robert Rowe

We we the the We say where side, prize were the year announced that cost kind productivity. halfway with we there's a manufacturing think see this I'd bunch a it's areas And we're did of beginning the cost X And a there's But lot still in that potential. still see outside full-scale there's year. transformation. these accelerate right? still initiatives. the And on is we -- manufacturing done the a stuff big opportunities. of one of on so and at here, of we And

And we more line that there some have our do. so roof optimization lot still to effective. there's facilities of There's to make a work

that going of year. where And products talked big And it I'm and put really it energy put product new years. the then time development of redid effort and role good backdrop short-cycle to inventory and we're And with of in the markets. a money put It a and X become We to all in we provider the now continue We've better with we technology. lot focus was just a to development for thing, management really attractive and this pump on so we process. new far pleased that. going where X.X, stuff we'll where comes what other Obviously, of we're organization, and plays Flowserve work the call marketing defining that the our about been of is priming kind in kind done product we've and of products. our investments transition part that

the is the that this with and time can long the kind we you're over Flowserve market growth and we differentiated think to think seeing so And come new drive run. introductions first products are of that new that

a And put confidence to in we as money continue company. we technology do there. organization, resources we're more truly so that to differentiated to be and gain And want put going more

that more And us where we around we think how we're the and more from so you'll future. hear in doing can and differentiate

Operator

Joe from Sachs. with comes question next Goldman Our Ritchie

Joseph Ritchie

pin cost lower down know around framework, XXXX little bit. XXXX. troughed kind I given margins are kind So I think here touched like a X.X%. to to Scott, just a in where cost you where you out. say, of guys of on I But troughed I I heading we perspective have into guess, done we margins let's of guess, a And about lot from the and as to take likely Revenues kind are think be hard than,

I'm I the XXXX trying just mean fair we given are levels. to that for the next margins think cost a is assume I provide just above -- it baseline year. expect to outs,

Robert Rowe

Yes.

just a throughout where to X.X. in say all is I'd only that Flowserve of in or with up doing manage cycle, cycle the this what about right cycle, more lot it's the quarter things I'm the down just -- a get we're the Yes, really I'm right? confident XXXX. -- we continue thing we I to we'll the and business do think Whether fourth provide call specific that

to to We as the for have at want the the have margins to as comes to we're preserve as want decrementals we so -- a And be growth upside. do result, possible. time, going to want the group. continue to best our we And in same as peer want in And the business down, we preparing best that.

to and And downturn, we're be to but making growth for that got sure right we've do pivoting reasonably the now. and point of growing we the we also to transition good things manage are on the so ready execution, feel return. it, that's right through that Is continue the kind we'll at markets downturn

And the And call, we'll think so get on XXXX end right quarter fourth and we focused real about the earnings I'd of quarter just and can we what specific things. are at do. we the fourth say, the

Joseph Ritchie

No, sense. last it. I makes that Got one And think question. then

percentage of Going prepared around like some your back global today. energy the of to the mix comments

today fuels? fossil I focusing think guess you is to context, you're going portion where introductions moving given And coming I XX% these do that where in said forward. tied can puck kind XX% you of of baselining, business to just some expected your can oil be of again, like and mix is product kind like just and the is of within then shift kind that what you to the think going, where traditional years? of just

Robert Rowe

say generally accepted. and there. and these of it's public Yes, reasonably decided are And I'd so -- we all a couple basically, recognized names sources

XX%. QX it and about there, of kind And currently, being at at X%. right, when end up XXXX so gas there. we downstream when out it or it presentation. look then the get on the we gas the number chart breaks it where midstream pretty side our put And oil showing XX% highlighted We QX, gets the to specifically XX% outlook was then put makes XX%, and markets, gosh, and And either as think oil upstream end we in And about into you about to to market of the I we think kind a down our XX%.

say, our that there. I'd mix just petrochemical with know It's COVID so well. backdrop, personal exposure inevitable. side, we on chemical view to is that's starts And come the there And right? But the as energy transition just accelerated as then is down, stuff my there some that, has overall, And this.

looking in become at moving materials infrastructure participate that whether truly everything in liquids and So how is can or process Control we're solution we participant Flow flow, a that a that to spending gas, right? be it's provider. anything want we so and involves that's And

so applications. the of talked work we new that about in products different And lots

It it in compressor, compression It in And so works the sequestration. protects is really CE other ring in works hydrogen. The what that carbon applications. is that works stations. gas does valve anti-surge the liquid

different IoT-enabled works to in smart limiter can so work in and And all the applications. other incredibly that And that of actuator, well kinds gas industries. LNG then the

markets. other the or so end different pretty And water actuator infrastructure, that whether is electric it's ubiquitous across

months, and part And so potential. of starting we've markets it's on backdrop, and when have strategy the that in transition to we're having attractive for And the are our energy that think our fruits we been of that long-term selective team. with XX see focus is you're to labor now got leadership those growth discussions

Operator

Our from Nathan next question Stifel. comes with Jones

Nathan Jones

than Just little a wanted little be XXXX. carryover this those The maybe bit some mean understanding, maybe out temporary your million some that Is back? temporary XXXX year. here second between wash that you it return Just could come morning, were on follow-up color so us from in don't comments bit into talking that? to cost costs now structural lower were XXXX, sounds earnings, it's $XXX it of the reported anticipating costs. give you to in way around that this a of any quarter when might net a like cost of volumes I there, the expectations savings you Scott. you be In one was tailwind a the of going my and was made you of

Robert Rowe

yes, an word. would I the as the of it Yes. bit And that, XXXX. of is half get not structural. here probably say uplift annualize $XXX maybe you I -- right confident you tail was But million, little what was in we're in a don't

that down add structure, a at to comes earlier, around on and back add back. first is measures got I make other -- are Amy, with thought with looking and but just then as I where temporary be say and on when think said I I'd do And got just structure. come those might the in do cost focused structure cost some cost thing line we very things targets we think of it's We've we'll those that? to that anytime out. There's we're aggressively environment focus. in tight this the will our to want is anything we we that, need to environment, the cost. to that be sure in. we are I put with team the the And on else is this you don't as it the COVID. more discretionary would

Amy Schwetz

No.

looking, to we're done that expectations that we to the based is those that think realize momentum that in not got try that structural I and market. beyond. key what seeing put place we ensure continue the and point we're know on is we to, that and and delivered and going expected keep savings we delivering our and we what that in into program want cost-out we've adjust We XXXX the -- we

Nathan Jones

Got it.

one Next is on price.

kinds price to asked Typically, challenge pricing, of and got to with it additional thought I you out on Scott, factories thought longer little those of like rates very last be same for maybe ago, than was then think pricing's do seems need the three versus order what months challenging the particularly you going I And quarter. you you absorb lower are overhead months question, challenging to three than may large It you've in figuring more these a we be projects. environments, the see things. filling ago.

backlog the of how low-margin Just need very those to your are full balance two of things not views on that your filling fixed things absorb the current you versus costs?

Robert Rowe

our your concerning similar point, will ask unfortunately, going say What they're to market. quarter. Yes. struggling then I that it the doing in are oil gas resilient. has because And is last difficult and customers hasn't some just are there. pretty a I did those think But And been I really very of and to quarter real, more that than pricing out own this there I'd is price the longer more really answer are others a teams with And terms our And that's is, financials. gets. said you changed. the it goes is No, I'm good it But job pressure on, of this as their maximizing well. the last it to pricing challenging places say

and get we where just that then the with cost and be price a little to absorption But benefits side, think really about what say on bit And maximize quarter. very might there. the are different think selective we do so I'd than offsetting and we point, this And we're to trying how your other can last thing how is, do we right, be on price. the

We are relief our chain. see supply in starting to

the getting to And savings seeing materials we're that the down deal commodities with. are that in so we're very of supply through the committed we chain some

the we're our best here and just there's the chain so save say, design-to-value other levers cost I'd with -- there. again, with trying side And and roof things on productivity pricing to then And supply line levels optimization. offset

And to But so through a work we're it's to that. right continue going now. definitely pricing challenge in

Operator

Partners. from with Vertical next question comes Brett Our Research Linzey

Brett Linzey

terms on And QRC out branch of of organizational year, are of expansiveness question or part the how network? the a as trend and guess, next those QRC first the lower is as realignment, it? the getting of that broader restructured of just kind in just strategy. about thinking does I the My part the

Robert Rowe

Yes. Sure.

large have we for QRCs the number at that. And I it's And the exact we're constantly around where world. don't but So differentiation the us. look definitely a number a at, are

long-term strategy reduction a areas where those productivity us. repopulating lot a we've for of It's QRCs somewhere those, the taking -- just sense this we And network of here. down few in to make that it's but there's our opportunity say a isn't of because would few not because then year, net a taken actually out can of else. and from rationalize can optimize so we think service it's we and I

at Pacific this. had overall. for in Asia We And we're opened know so Jay as Pacific. And East I might openings I know sure, last Middle wouldn't we year -- for Asia constantly net this do and in expect think well. again, -- we -- I can't X sure. earlier the reduction we I up looking think I But year, a then And

some move add to of again, QRCs And in proximity to and those as However, want things customers. to continue best investments forward, installations. grow support year. consolidations there we'll big be us, then our we And this will continue in we for

of Asia in up as so proximity to continue And Pacific those locations. East, our and Middle projects in presence got we've and forward be to advance in the move

Brett Linzey

Good it to should you I to thinking for $XX hear. in million a this And years $XX was related here? that CapEx, be we somewhat are mean, a sort is as place year? into of million you higher? roll I just update. the Or reduced number good terms What of next to think couple And move last for year, then of

Amy Schwetz

Yes.

So number the million us we'll see the on and this anticipating building to we're focused for head safety that need -- capital. wouldn't going XXXX. that we around I than don't year. And floor system that into although necessarily. our are lower We're maintenance Flowserve really focused on within mark as I spending necessarily obviously $XX call be we money enterprise structure we a and

at still but numbers, look would the modestly we or as So anticipate we'll that I through XXXX, working we're higher. level be at

Operator

Andrew of next from Our with question America. comes Bank Obin

Andrew Obin

question. a Just

will do the question price I chain? adjust conscious? your you how I'm you think, more it evolving, in of impact is, terms a, where of of supply You length on own and do the COVID as about chain thoughts and cost? pandemic And change geographically chain, localized, the you issues. And more the sort does industry it source global think your it supply And guess location industry just sort chain is and highlighted maybe and change of supply from supply the industry your shorten both become will of some supply thinking will sort bigger or based

Robert Rowe

Yes.

go -- me let we what back just chain. do and I we Andrew, found needed our X.X supply within Flowserve So the what to to original and

when was this, we responsive fragmented what found Flowserve. highly within chain so supply we started And and a

to our our manufacturing locations had location bad, very leverage spend that that of while necessarily consolidated we're they is for enterprise. us allow what lot we with across decades. saw that's buying relationships a to doesn't And our not And it so locally

journey international scale. of sophisticated this more on chain get so the on been supply that kind can over And to really now last we we've leverage an years, a X.X

even beginning progress good probably with this not that And here. maybe halfway effort of overall so we've we're with Similar transformation, year. made the pretty done at the

to we've and supply so we're got We've to partners path the on got still we have and with, get at We ideas around level. spend. how truly and critical proactive that quality lean, partnership share safety requirements. things preferred agreements And around do collaborate this

got this, great a on team And highly progress. so we've making and focused we are

start of impact Now really geopolitical is when impact do primary and are big you of for set want say, then significantly we're handful a just a say, what And approach I'll these of situation And castings of backup. I'd is work to of throw The supply of hasn't really is the have as range, COVID geopolitical try suppliers that one the spend us. our kind people. twist reduce different. a the just for to and in kind continuing the all. as with just to at add we some us, COVID, other of the the partnerships big backdrop things to of with of just our already changed -- always And as we're process just I'll well and is we doing

get one really that the here. suppliers. important working we're on to into formalize progress really selective pump we've looking make then that And that a so good and we're really of other some hard. got categories group And side to Motors miscellaneous is

we next I you where years COVID, improves an organization were extensive geopolitical I chain regardless the situation, thank dramatically of answer. the think last And versus think in an two such so for of regardless over supply as our the

Andrew Obin

And Thank you for follow-up question. a such an answer. extensive

about X.X, headway to having this sort numbers any put of the Does you Flowserve COVID you examples? these of guys sort think, great. give of part PTC, customers monitoring. of stuff, I talking technology. of around in that you more doing can environment? it making make If open be would more As initiatives with kind with digital remote Are were Can guys you us that,

Robert Rowe

our this Sure. is a yes. to The really of kind answer want of the productivity. to what improve lot only world and we data and that's providing there ourselves, new IoT and of kind and that the solution our understanding and their useful of operators our out and better diagnostics We've monitoring short in can collect information reduce we maintenance do to made data progress in providing to to costs just not but

am that. in of we excited the is about great year so I progress And on that this one things made have

And value not say pilots to is we things either of our terms I talking is are can the and that kind we're and to in data what investments, chem starting the and yet going of communicated either all of I these of strategic continues testing great understand and are of value And I -- the in or could had we some QX there and the with and group this with with using we customers of other some petrochemicals, some infrastructure certainly to my think point appreciate we're we some But what how about then we're data. think is so to partners, say working here be. earnings do collecting our and detail. say of offering But all would we that of be But what and that terms at advance. do. about that specialty to, last this call future others talk full-scale would QX, everybody the in or point peer prepared in would and we're refining, that going

do want And so And big there's to we Flowserve. we think combine knowledge what pretty is space. Flow an Control. We this a for think opportunity our exciting of is

got transmit where that and side, the our we've the got smarts before. on got allows actuator to so we've we've collect limiter where position, and weren't electric isolation, we do a able unique smart valve And data us to

with that side enabling pump terms got now side. energy a business, our you've collecting the on of it more so in actuation. the we're in flow. with and isolation And on in the control then We've now valves got pump controlling And lot

a think solutions provide energy and we're in to to position we control isolation, better so with our customers. And unique

And and far post. what we potential so and this, we the the into what probably we're think QX to is our or I QX too at prepared doing what talk want for of is, that terms are don't go to aspiration end value prize in of

Andrew Obin

this deal it's hard COVID a all guys. sort big on how be focus And of is going noise, to for to the you

So look you. Thank update. forward to the

Robert Rowe

Yes.

Operator

comes Giordano Cowen. Our next from Joe with question

Joseph Giordano

You you talked it. about the balance highlighted sheet,

about that of mentioned targeting and the process you of -- sheet? out. kind with worst transition? think How deploying least Now you way do area balance of there thought things energy at your as the with its you gain to the kind in this working transition, through bottomed of that kind kind are hopefully And things of share

Robert Rowe

an Sure. I'll team maturities Amy looking other a start that. and done the sheet, on job to like can And position. Amy put at and of the kind of investments. the maybe healthy then kind talk firms about way and nice inorganic in of us we're balance we're have But like on some things debt -- the the incredibly

firepower And we like some the long-term start good effectively sheet. about we for so value feel deploy got creation. to We to balance feel that

offers augment markets that can talk and different programmatic we're at to to about the closer. attractive a before portfolio going looking enhance and so and things And

dates. takes fires we it and come looking to. So are to at But sours unfortunately,

different portfolio. timing Maybe want looking say there. is, And that to add actively to add we at sometimes can pull so we're to the that would things something I you but

Amy Schwetz

Sure.

deploy that cash is the to that And attractive think that would to the investments focus XX. value make in of of with we we So confident XXXX, our how we around through successfully Scott plan quarter's relative refinancing decisions the we address about mentioned really that say some I'd do and financially in our we're always into can about we integrate lens say this that and that XXXX think I of and just shareholder business. and tender, optimizing with maturities coming financial M&A had capital. maintaining where as deployment obviously, respect we to And flexibility. near-term

that's continue doing. try our that options to move ensure we're into weigh we XXXX we'll to So and as

Operator

next Baird. Halloran question our with from Mike And comes

Michael Halloran

you commercialization, are this And about journey? participate? transition new are just energy So maybe participate can you just of about where that environment from internally? my in from that you related, forward R&D, to Or more the that. going think targeted do far think in you when end. more trying one products When that's to layering product how it about perspective, a to new talk ongoing M&A development think then you you some Is bring to require on and you're something is an fully fully from

Robert Rowe

see the again, technology other and bit little of right we'll ago. things. about the improve to, Sure. and the two, what a doing product time right we're And first, transition. pleased I'm energy then But it. think good development really a one, of with taken out created get to things we I'll three, doing talk it's and But start come organization I marketing talk X years focus, we're process side about And about now, here. new of

of And of understanding But to lot more come and innovative engineers markets, end think experience so folks just lot got team with of markets, that of we've a nice combination a truly thinkers. understand and combined a it's a lot here. I a our great there's our

The can that And really to wanted we've and Flowserve legacy differentiation. applications. technology that we're first a company, so luster and got on And make different kind really always that technology that important was we that was many this of sure is something me. lean product of were in products in I and restore to

in a we're but -- I get understand to where lot position so at want at seeing And of of we're kind that, how to we to results we're of going work do what do we beginning hard the it. done beginning and think we've a of the the to truly

so be to really a of transition kind feel about it's where we our combination. And I put do good And that. efforts, at always Flowserve, energy on and then just going

product -- that at better definitely we also to be robust it's and faster a And looking the landscape, look than to can at internally, we're so the value to new within can organization, we make to inorganically, we we opportunity it portfolio want believe Amy's And have development going but want a extra do do point, and there's returns it we that. creation then right?

so And customer getting really areas hard industry, those just know we be want some in to because we overcome go there externally some that on our of to AVLs. references and will it's approved the

pretty attractive and the we're application we we what have, be when we balanced know got we've at And got behind make so valves any and good right? XXX committing I are we that just want, it focused think to externally. in-house what channeling And both I and can't things future and so look pace organization feel inorganically experience. those out really that the will product approach, just what But legacy resources, go But years about We've think then to of a it's do long-term something and that's And folks we looking we going pumps believe about much the markets. outside. is there. and do getting

Operator

have session This and gentlemen. ladies for day. Q&A you a for today. great you, participating. Thank and concludes program Thank our Please

Flowserve (FLS) 6 Nov 202020 Q3 Earnings call transcript