FLS - Earnings call transcript Q4 2021

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Operator

Good day and welcome to the Flowserve Fourth Quarter 2021 Earnings Call. Today’s conference is being recorded. At this time, I’d like to turn the conference over to Jay Roueche, VP, Treasurer and Investor Relations. Please go ahead, sir.

Jay Roueche

Thank you, Anita and good morning everyone. in and call results. full participating Flowserve’s to you quarter fourth year appreciate our today conference discuss We XXXX financial

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

for our Following call comments, will we prepared the open questions.

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

Scott Rowe

earnings fourth Jay Thank Thanks, our for quarter call. everyone. and good morning joining you

of discuss situation we Before results want the today, our the acknowledge I in Ukraine. to severity

including in peaceful years to are and associates have sovereign several progress attack in and their normal are come put geopolitical on sincerely journey. hoping to bookings, range challenging no in and capitalizing fronts near we the country on Russia ongoing for begin my humanitarian quarter will the Flowserve We transition the energy overall supporting country, closed in that out prayers XXXX, fourth most aftermarket consequences as wish on perspective environment with continuing made COVID-related recovery delivering excellence future. with business possible. The Flowserve our start thoughts and in across disruption and our impacts associates for peace their a the our outcome expressing remarks. the to Flowserve Nevertheless, prepared growing something our operations of our now hope Eastern and strong Ukraine and customers customers. to our has customers during to the more returns want we people, time commitment challenging Flowserve, their appreciation this sincere and the I’ll into that of pursuit I transition. significant our for of to today. citizens, Europe for the at to difficult my remained are While by

serve pandemic. had Our worked our financial to people starting greatest have our Flowserve’s year. From tirelessly a primarily they results and standpoint, customers did financial backlog truly entering it throughout the the lower due the impact to prior COVID on XXXX in last year than had position a we asset, are larger

done customers’ serving they infrastructure have remained And challenges personal our am many of the safe work. committed Omicron to I variant, despite is impact the in cases returned proud the pandemic our the talented later to we Our majority as With the around to productivity in associates first from peaked keep believe largely U.S. January, the COVID-related have by our needs behind globe. throughout critical these associates was our to further and quarter in operations Europe fourth in impacted and to of team years. have our absenteeism us work of we the faced, then has the appearing now

into third quarter, our many labor the faced availability the fourth locations. chain middle modestly addition including worsened in inflation, and of quarter, we beginning headwinds continued macroeconomic of In impacts, XXXX increasing issues heightened disruptions to COVID-related the and in and supply direct logistics which

directly issues but overall customers. are impact traditional product our these actions, seeing markets Despite with to these addressed promising are serve cost have for across ship challenges, with increased the XXXX. our mitigating We our and net our encouraged ability has to our outlook we and delayed fundamentals end

strategic the foundation With growth I and on framework, positioned is place, later discuss through in greater will in our we deliver detail foundation the build in Flowserve plan the have we execution solid further that to we year, well to of believe this new call. which

Let me on results. first provide more our fourth quarter color

Gulf to level total, deliver in on impact quarter the particularly prior muted in The generated activity, year. our strong prior distribution fourth XX% gas, million, of earlier, the quarter XX.X% one bookings Aftermarket backlog. position an higher-margin for From In a fourth of especially and which our we encouraged were bookings, markets orders the roughly bookings core aftermarket the of wins, growth, was by bookings of end strategic $XX ability highest bookings our first through are our of have our new billion, pandemic. fact $XXX increase customer of up noted transition and was and energy strong the increased which $X.X in year, oil reduction. standpoint, MRO the I including $XXX remained year-over-year transition As in broad cost sequential awards and the of their finish quarter their highlights excited were we by are versus most were this over included million occurred bookings this XX.X% to quarter, year-over-year energy over favorable project mix our remain well efforts. X year support mobility and year. to OE equipment We efficiency, and in quarter from bookings strategic XX.X% million awards, the remained prior and a in XXXX growth range. with large support XXXX, we bookings regions. driven carbon confident larger Flowserve project fourth awards journey across including our drove Coast aftermarket recovery quarterly from increased Improving growth asset million Throughout about being minimal $XX while initiatives contributions and and our the largest decarbonization global strong flare to savings our customers that our year-over-year, to delayed and totaling since only higher gas Project consistently the work. the fourth shorter-cycle up of million can full deliver the energy $XX despite to With and offering utilization and $XX of rates the delivered million quarter.

also were perspective, year-over-year served In nearly XXXX market growth solid full essentially gains XXXX. billion of bookings returned our compared general were chemical market, aftermarket seals XXXX, X% year-over-year, demand oil $X XXXX. gas, up billion, of the which levels. foundation and or end-market significantly and prior up XXXX, industry and Water our at share largely in pre-COVID In XX% XX% levels remained our $X about largest From approximately backlog business. for versus and year-end our bookings XX% above with for to year, to in business grew is strong in power an bookings sets Our a including flat. X% year and increased bookings up while bookings

complex. primarily North were COVID-induced XX%, this regional $XXX and and level with from East, Middle was perspective, up full XX% XX% growth a Latin year year-over-year, Europe XX% From from America of the and driven contributing respectively. and also bookings growth and by which America the encouraged on or we XXXX gas bookings pre-pandemic million off our downturn of growth, over to the are tremendous we are oil due the While still nearly impact X%

impacted Asia in Pacific bookings part were a period down declining XX% were XXXX, X%. only compare tougher bookings due in less to as

to quarter. approximately revenues sequentially, now expectations of statement, the were which million the Turning X% below $XXX was fourth entering our income quarter roughly up

remains good is and the expected quarter. headwinds fourth had mainly remains in into labor this associated profit and to those timing at the normal as delays a issue. going logistics supply quarter, backlog. and increased and during Cancellation this chain beyond a work believe we news availability anticipated what rates remain is our we While issues low The cancellation result, levels, we – continue the

costs as progress margins be the XXXX. increase the X.X%. associated by that the revenues, supply are half chain sequential associated which produced impacted year-over-year environment the drove in point throughout year, to adjusting under-absorption this potential with conditions to to to frictional margins the improve logistics and second our and to negatively to nearly performance, the pleased operating expect we said, We XX% in disruption. the basis a a sequential lower that operating return in Shifting we more operating sales continued margin, normal With operating improvement with XXX adjusted of incremental

to and results a positioned view year, outlook expect we as our base Turning cyclical year the leading market continued to our for recovery. this XXXX our growth end markets multiyear are for

the momentum oil growth, stimulus our our and In businesses, and are past provide Sustained driven these to elevated last nearing infrastructure X backdrop many spending approvals. by in of maintain the aftermarket and we in addition years the confident XXXX that in X will particularly belief end of the in in across infrastructure part markets growth return MRO investment underinvestment our significant we and a prices, spending gas. The the more of years demand funding pandemic improved commodity macro XXXX. for with our discussions in in or constructive project the underinvestment project customers are during and as projects than at constructive are increasingly

and year, to nearly are our of funnel currently we cyclical that positioned is well in recovery advantage we project end time the last confident the this markets. take XX% Our overall of are macro trends up over traditional

positioned we targets, factors, nearly in Amy corporations’ tracking activity service position transition-related further growth With over greater technologies expect during reductions. at this last in higher increased than in XXXX. versus product growth climate spending deliver year-over-year range. XXXX. to and X% I that including performance Additionally, for by this results has emissions backlog the now we to in transition see Even in the is driven year starting transition energy the to initiatives government-stated offerings greater cover number year, our energy detail. emerging growth This the single-digit to estimate efficiencies year stronger call upper bookings total, over continue in visibility of a of our uniquely now time deliver Flowserve positioned year, believe our financial energy last and is $XXX are driving energy is financial transition and where our we revenue percentage spending. and to well opportunity stage In opportunities change early we expected set in success. million turn level are the to We in will opportunities ESG this this of year’s, doubled commitment energy

Amy Schwetz

everyone. morning, good and Scott, Thanks,

Despite performance. that the will the returning evidenced in the serve continued quarter As on XXXX based this the our of fourth we Flowserve operating Scott backdrop, fourth to for of supportive as be environment third the strength experienced growth we discussed, bookings quarter expect we a year markets in XXXX. quarter into challenging

Omicron, and quarter. rapid chain, primarily labor in supply European we the the operations, of continued North American faced With availability our rise fourth headwinds logistics in and

below per debt As $X.XX, revenues $XXX accounted million. a extinguishment the delayed, realignment the In only were early items quarter, foreign approximately On a majority result, some QX included of were reported of of basis, expenses. in quarter $X.XX. occurred fourth our current $X.XX operating to per incremental the shipments profits quarter impacts fourth related and adjusted earnings income $X.XX the and the the currency to from slippage on year. expenses in for to for below-the-line line EPS we $X.XX of share share the included planned which of was adjusted The that delivered deferring and revenues

versus despite that top X.X%. the As bookings backlog was XX% XX% minimize would X% which year-over-year. XX% XXXX. for that a last of to about by This backlog starting months, that entering Fourth for rate was reminder, expected year, prior than our up dollar. but this about conversion XX% below to but revenues prior labor of XX.X% XXXX we XX% the supply contrast impacted catalyst factors, and sequential persisted quarter, XXXX XXXX backlog XXXX, decline over I’m XX%. our The the also pleased were sales the higher why while the expected starting approximately year in Considering backlog revenue decline, also flat. was revenues increase would we growth, the by helped X% year-over-year, while business, U.S. XX growth total, decreasing At it quarter growth by FPD were of sales reflects historical of line chain, increased sequentially in challenges following typically is in XX% been sales resulting mainly recognize original our down impact although the availability flat the Year-over-year, expected X.X% over that foundation it revenues down due year, the the in laying the revenue. were seasonality slightly year. revenue, increased a these of driven in incremental the primarily is to decline backlog stronger or our the our by Fourth FCD’s have relatively aftermarket logistics deferred FPD’s quarter were revenues FCD’s equipment more by OE moderated

by For year driven full and our bookings Middle Likewise, East decreased the America. X% X%, much backlog X% portion offset year and bookings XX.X% turn FPD’s revenue year-over-year this was driven recognize has segment. by regional year-over-year XX% in up XX% as full sales to typically were offset in that the growth for down together decline starting faster, OE sales, by America built increased primarily North in to particularly in aftermarket essentially flat. was our FCD’s was original a is Africa FCD’s were saw OE which by year. Latin a Pacific. by full growth largest XXXX Middle XXXX. year From change by Africa dynamic X%, were decline the X% and revenues revenue increase North increase a and Asia X% regions of XXXX, mostly our down billion, to were X%, as for the and of FPD perspective, lower decrease $X.X This America, larger revenue XX% slightly was slippage Europe and XX% respectively, equipment Aftermarket and partially and due those FPD’s XX% to backlog, Europe, up the our which sales driven in given XXXX region, should year East which

gross FCD’s decrease while points margins, related Turning I now to XX XX.X% margin from primarily backlog points. The adjusted challenges XXX basis to to just point and by operating basis driven quarter revenues basis adjusted lower under-absorption. the fourth gross fell XXX decreased due decline, FPD’s to the margin spoke just environment was and beginning

implement modest of addition, start in particularly our we well, larger while use the In increased we the price/costs We how in largely however, inflation managed fourth it. were frictional we increase they levels address and products. did a fourth and in quarter, see XXXX to incurred and our of ship FCD. Temporary where inventory, rising get including headwind the we our has these Flowserve quarter, impact price don’t had the results permanent, frictional a labor issues, to issues overtime type much at quarter, the freight in but as did impact the a

quarter chain, were basis that and decreased a offset respectively. $X the FCD in points We of were million X.X% million For Fourth we million, product the level the mostly XXX logistics these full the additionally, and to FCD’s disciplined prior a year and benefited factors adjusted quarter fourth under-absorption, and supply reported saw XXX quarterly through On basis in to gross for year, decreased the respectively. Partially our SG&A year approximately earlier, gross points, year realignment and cost versus full XX% most the And FPD or represents fourth headwinds basis lowest higher-margin XX.X%, again, decreased incremental declines of full quarter the FCD, contributing the was million, which margin margins $XX points efficiencies. full issues basis, discussed offsetting X decade, labor operational and to $X able primary mix adjusted with demonstrating and year sales margin lower decreased control. XX spending to variance. $XXX XX.X%, sales in over SG&A and lines. respectively. year-over-year impact pleased environmental In XXX of reduction from prevalent given FPD favorable availability

Nevertheless, year sequentially SG&A XXXX. points aggressive a XX SG&A As driven which SG&A XXXX XXX basis to denominator. declined inflationary XX.X% basis reflects decreased percentage a over versus $XX On quarter to of due decline do basis million the lower items, sales included increase. adjusted adjusted adjusted an as taken On summer last declined spend declined SG&A increased adjusted million overall reported did and will the pressures adjusted compared that reduced XX.X%. expense to the our basis, quarter by items. the percent sales, SG&A SG&A $XX a realignment million in $XX due metrics XXXX reduction in XX of the points $XX with million, XXXX, fourth exist, basis, in of fourth mostly increase a in actions but Reported year, points $XX to million cost modest our to We in full also expect expenses. that

anticipate year-over-year. XXX quarter of we will we to adjusted XXX that X.X% sales However, lower. respectively. FPD percentage points, and Fourth margins SG&A FCD basis a of adjusted as operating decreased continue margins XXX declined drive points basis and

In our addition in the offset margin have quarter lower the XX operating $XX basis challenges total Fourth expense reduction annual year-over-year adjusted the X.X%, segment’s margins. the of on more impact where discussed the profit, previously that items. selling-related the reduced decreased operating SG&A points gross to decline allocations than million reported to platform’s

and had as were XX.X% by of lower XX.X% we tax Our and year globally expected adjusted foreign as audits. than our fourth resolutions well quarter rate favorable driven income of full mix certain

$XX seasonally million. generated in capital, liabilities cash inventory, $XX reductions strong million, and payable to cash driven quarter which million of of cash and accounts working $XX by net from Turning $XXX including flow and included operations million nearly from of flow our increased assets fourth liquidity, contract of was which

flow cash due to the a less Our have to historical drive cash that ramp throughout work we the quarter done levels more fourth year. consistent was cadence flows than in operating

we adjusted as in year delivering lowest generated at conversion above full earnings first cash cash in of to quarter a of Supported a $XXX flow flow conversion began cash of Fourth was was working time XXX%-plus over year. year since fourth quarter the XX.X%. of by capital pandemic marking each our fact, free our free XX flow In XXX%, years level the sales the over performance, positive consecutive XXXX our the second we’ve quarter free target. percent with million delivered

given year-over-year logistics including incremental last by our chain, inventory, We’re reduced we the $XX contract sequential improvement points million sequentially. and to supply labor and inventory $XX XX and the with and progress and versus challenges. quarter management, continued of pleased Thanks assets basis focused XXX solid million nearly and year’s fourth liabilities

Additionally, while year-end year. backlog as liabilities prior XXX to basis backlog, and assets XXXX, increased nearly $X a of inventory, to since contract $XXX XX.X% percentage million billion versus including dropped points

the expect progress continue and as to look to leverage We our business. improved grow working plan now XXXX to processes into in as we momentum tools place the capital and we

Following over strong X a our years, refinancing with significant liquidity activity last year the we position. the ended

cash year $XXX million Our end million. of available $XXX credit position about facility with was about capacity

other with at and XXXX dividends that transformation contributed to to our in of $XXX than albeit associated repurchases, we share pension the and shareholders efforts, through levels uses our years. significant in million realignment the million to modest refinancing and funding of addition included programs, expenditures, more return in global recent capital In million cash plans our approximately $XX $XX

operating our a transition as growth we for higher look confidence capitalize support XXXX platform solid expectations starting outlook. opportunity energy and on stronger in These through improvements, encouraged our and we to are fundamentals revenue of now backlog, by see end-market activities. return XXXX our the factors we Turning the EPS outlook, our our to

year at range, EPS targeting in to adjusted midpoint. a $X.XX increase XX% EPS represent XXXX $X.XX which would are the over We full adjusted the year-over-year

special includes currency to such as range target exchange our range, well other and increase of the may discrete to below-the-line occur divestitures, in laws, FX of current the to expected that during as reform initiatives, impact the million X% at etcetera. $XX effects expenses adjusted as headwind foreign X% approximately revenue expect potential also items as modest items The rates. X% We acquisitions, X% a modest which tax such year, EPS excludes realignment

expectations improvement realignment spending, adjusted The expected initiated Flowserve’s and the rates, differential reported reflects range of Both our adjusted stable in to conditions quality reasonably for in pursue range the EPS earnings. our customers foreign reported the EPS project our the of continuation commodity $X.XX. and only range $X.XX we current to currency continued also larger current assume Excluding the between prices, investments. our small reported target market of EPS and

of an range expect We XX%. $XX to net rate and tax the adjusted million XX% interest between $XX expense in million and

can in You guidance deck. our and our our metrics release press see all earnings

Flowserve’s exaggerated second be of been cash that terms have in and earnings phasing, and half-weighted, In to we traditionally XXXX. expect flows pattern

to On availability revenues to the to be income have and of positions expect a And quarter availability to chain, us to first the off half as XXXX frictional and constraints QX, we contribute for with like XXXX of quarter about our do our the well EPS believe and certain expectations. our get growth. challenging guided needed absenteeism anticipates the we in our to due strong higher impacting first despite to margins products, ship labor half earnings to supply revenue first for of costs the expected see full January related of components year will expect logistics slow second ongoing limited And ongoing XX% expect in start, revenue challenges. improve we in remain guidance told, continue in Omicron-related We we quicker our start backlog of by as flat first statement, although the All suppressed conversion these would to year. year-over-year, XXXX half largely to year full our EPS XXXX. XX%

prior comparisons. our compensation a the impacted quarter year’s last be March to flow and quarter we incentive And expect to in our cash first compared we payment made addition, performance tax year discrete will in cash of by impact first million which will year-over-year January. quarter in this $XX XXXX foreign second In flows both years, fund of

we over for planned year, cash to to dividends. through return major million usages shareholders expectations $XXX our this plan to Turning

business range, IT We build-out our expenditures continued with our invest to support productivity million $XX to in further the further also improvements. the million to capital and in systems including $XX operational intend of enterprise-wide

Additionally, growth growth our further our technology new expect opportunities increasing pursuing we to on Scott in growth profitable by that product strategy advance will and IoT to just our including RedRaven platform capitalize as in strategy. development, a well to our new speak moment, emerging investment as inorganic

me now call the Let return Scott. to

Scott Rowe

our our Great. To prepared ESG to total Thank our Amy. ESG of you, and XXXX, proud leader a two in topics: I’m on highlight our and journey. want recordable progress be conclude what perspective, to people we strategy. incident I safety long-term in We program commitment rates. accomplished progress an have continues remarks, and on industry ESG From our the evolution of tremendous made to

reduction one corporation initiatives environment. remain the companies across despite employee scores our the our sustainability ESG of With rating as company that footprint, award only including improvements. their leadership suppliers, have by third-party among continue recognized proud to recognizes published as Newsweek’s the our companies to listed and is Within associate target receive executive population. reduction agencies their industry-leading top are Directors of from well at of improved we We most team are and Chemours that currently eligible improved With Supplier emissions that garnered hundreds Award, recognition, of by we innovation were have World’s challenging as and being I’m progress environmental our we in America four distinguish diversity pleased performance which our of Flowserve, from Chemours engagement responsible for our the Forbes’ of various value significant in goal, ahead to suppliers the with that recently as the Top one Board our elevated themselves XXXX. of through and also scores COX make customer also sustainability. general XX% a our Additionally, towards and people Companies. selected Flowserve quality, own we Female-Friendly core

governance ESG of our we customers, stakeholders and and has ensure performs our forward. corporate culture, associates, measures where taking Finally, communities all and in our going key we be are including been approach our in proper strategy mind, with the suppliers, our to will to operate. shareholders, lenders

Let our me turn to now strategy. long-term

Following this to several and the years think, the way to Flowserve, mindset phase deliver of into as act creation. growth actions and are putting of we we operate enhance transforming next value

solutions traditional to capitalize we the space, our capture provide markets be increased to as entire intend more available on opportunities returning our the and with flow on appear to broadly Even growth, control focus efficiencies customers’ drive the through multiple energy providing also potential this enable We to over the business end-market for flow Flowserve’s believe resilience transition. years improved control various growth to cycles. outsized while model strategy has

initiative. control strategy XD offerings is for digitize our world aligns strategy and to flow provide organization. and directly new dedicated that comprehensive part XD strategy Our the the to supports solutions is everyone. be of long-standing diversifying, statement, or past make our on decarbonize extraordinary laser XD and certain Flowserve’s growth now with But of the aspects for and what calls, purpose focus on the outlined better resources will I’ve throughout

oil this The of Flowserve component recognizes moment highlight divisions of me Let pillars strategy. strategy companies. the more gas meaningful leverage to each and that today take has so than most and our of of to key a diversified the the in industrial

We centuries, infrastructure serving have experience and control. decades, within flow other expertise of if not markets

with of like general end our industries strong vacuum strategy also reach products Our existing chemical This the expanding participants to reengage areas pumps capabilities. is goal and we seals maintain aggressively like market about offering water, market offering. other where and in our now is specialty

remain that growth is markets greater attractive exchange increasing But Finally, long-term to An that customers we example exposure diversification our markets, supporting and That to we resiliency and successful outsized to our important reduce pumps the gas clean emerging is that provide plants Flowserve cycle. the ensure the to reliable use potential leg world. around to of pumping residential gas we Arabian the In regions produce our our domestic we look no leaves support XXX,XXX with the doubt, water technology to diversified into change for Saudi about been exhibit supply have of technology is approach the cubic pressure future. world. end has efforts through into our efficient implementing goal the utilizing and meters world long-term offering seawater many technology control committed decarbonization governments the and to and recognize growth and flow control today climate to new full the Converting oil are industrial consumption, customer prospects. strategy, fully the water emissions. around issue day. of corporations for an the desalination to working increasingly clean to highly around focused and on countries a greenhouse

As over carbon-reduction comments, transition we’ve to year products energy where can today, the many and of be aspects aspect with is past Flowserve utilized flow capitalize uniquely the our of positioned services efforts. customers’ in our our control decarbonization, on discussed

our focused We energy rate capture also to are expected growing on opportunity grow our confident of operators focus optimization. and to the energy we that our established through awareness continued increased will while customers’ to on cleaner need technology and customers is on that Again, have support approach this reduced continue considerably. investments, to our for continue existing support team their existing flow loop dedicated a with cleaner efficiency infrastructure With we energy assist opportunities. emissions, provides

market cost advantage to three related now new the that and efficiency are advantage, provides Advantage going Energy We approach calling advantage. which with program, offerings: carbon this we’re

solar, carbon carbon services and reduce supporting our This is as a enabling emissions COX offering customers recent footprint will we such of and areas customer. their flare Flowserve’s the we control hydrogen, storage. reduces make energy and and products storage, their gas utilization to we targets. organic premier for A and significantly reduction ensure are to toward decarbonization that Additionally, capture biofuels have flow evolving progress compounds, portfolio recovery system technology is toxic highlight that petrochemical carbon be major

Finally, digitized platform. represents focus by our digital growth RedRaven our on driven IoT

valves and XXXX seal support to still and RedRaven infancy, the offering capabilities by XX assets, in customers instrument encouraged in full instrumented XX,XXX and X,XXX first its have ongoing set acceptance significant and in over have its signals. We offering customer over nearly in growth the a including data systems applications, of been this of our beyond. of traction across While pumps, currently providing and demonstrated now expect diverse market. we year the the of We capability

recurring of is early goal and most our installed solution is equipment indicates a has adopting technology achieving and that many possible customers demonstrated profitable our Feedback new have the from we we as value. its base instrument and approach stream. to RedRaven get there. and initiatives, revenue existing right convert believe Our critical start-up goal, mass Like as to to original our

growth long-term outlook the near- we both detected enhance RedRaven in reduce to Just environment, a approach our power catastrophic in forward. current with boiler of only provides best them alerting capabilities macro recently, strategy downtime. that upset new and in will going desire downtime, our and address diversified, and supporting digitized The added are maintenance new of advance Flowserve’s in summarize, confident opportunities decarbonized the the costly well growth for and customer’s conditions unplanned believe that we customer’s pump, leverages To for the company. preventing strategy the and this to to unpredictable pump damage focus the

as and strategy in fully move the are compensation. XXXX about We have new to our committed beyond. updating targets incentive the you and on forward. we for to we value In Flowserve’s closing, are XXXX prospects and incorporated We execution progress growth excited look forward into creation

set the are growth multiyear in improved backlog, strong traditional with a started have a our year conditions stage expecting We believe the and customers’ investment markets for our cycle. plans

and our investment positioned capitalize over our associates, supporting as concludes to and our beyond. in We shareholders Flowserve customers last well we cost call our Operator, desire the on pursued improving see work what efforts. to will has now development strategy we an structure market decarbonization and to existing target focus remains operating questions. and for and higher years our growth XD to growth The XXXX drive new efficiency prepared Additionally, and dollars several the value that our while like would opportunities open to this remarks. environment, our improve customers’ ultimate and product technology platform growth to

Operator

will with Nathan We take question Instructions] from [Operator Jones first you. Thank the Stifel.

Nathan Jones

everyone. morning, Good

Scott Rowe

Nathan. morning, Good

Nathan Jones

these targets strategies higher more oil transformational going time? to more have I in it, fast-growing kind of focus grow and exposure about wanted you these with more or Clearly, of and power Any that? making XD If what the some and going of traditional shrink the to a and acquisitions result XX%. these is business is what gas for moves gas markets. look to will power And this divestitures some more after to to dig in on are your Do accelerate will at I and kind over to markets growth in to areas? you’re markets using bit little oil your some than what thoughts strategy. these

Scott Rowe

strategy Happy this attractive so Nathan. and Sure, areas the and talk here has growing growth to finding competitive Flowserve about where the and is XDs the Yes. market. a advantage all and about really,

so of And XXXX. included plan many is just our and – Directors, the had thing and other compensation we’ve were discussions our several in than say Board I rather – in would with

targets And about what lots had on so are how different we’ve said, and this. the think with that of discussions we

and And putting we’re our of business so expect the in the is gas would long-term. than want what grow over or category, a than of we the traditional we markets oil business XDs our in what percentage faster saying rather in to diversified our a percentage

bucket targets markets. of the right, growth the kind we a least shaped And so $XXX at we point, it. up, traditional above $XXX million what this The to decarbonization overall XXXX categories, or to we’ve company gas in would million. The roughly diversified and how But for of oil percentage roughly put represents is $XXX the was million. big your

this... we on have part of expect business of this And so part growth versus a outsized the of the and our is already the to business. rest this business, And meaningful

Amy Schwetz

we XD from portfolio, R&D would anything do internally or I certainly about in add the that not want would moves strategy. as we just we make, standpoint investments to portfolio, inorganically there that Nate, of we too, support our that’s think whether the or and

like standpoint customers the gas current help looking from our we oil and of to needs. them the well transition positions energy do their meet positioning us though, with our terms In at portfolio, that we it think

traditional look move them our and us or so at customers their wholesale serving helping goals. given it a them And away move benefit in in that portfolio the we that we from see optimization, gives don’t – as achieve

Nathan Jones

be on the guess Thanks. then transition pipeline. I my follow-up energy going is to

tracking You $XXX million. about talked

did driving how million typical rate you about in $XXX that for said up in XXXX. tracking? You time? And that a you What’s over do win revenue million that you’re $XXX go

Scott Rowe

would what Sure. than higher seeing. The decarbonization currently bucket in we’re win the rate typically be

to approach is our end so target there users. really And

through goes that work it’s through but lot the a getting getting booked or of of some EPCs, And end user. generated

And we’ve some installations the other. big and got installed so refineries, with at really base plants, relationships water existing good chemical

decarbonization that looks so we’re strong and the just looks base, installed that that by having existing getting having early into fast the And forward we’re we if then serving. And we’re on more customers getting relationship, – space. that’s

you get in flow If we’ve with the fast we’re of and that the the carbon trying And of the the more we’ve we’re been diligently and stuff thus And there that. energy. to a support become capture storage, control supplier into conversions, that the and the biodiesel to technology prime had. forward of got process off the street other world some licensors do with working new work the in that technology what hydrogen, sure utilization to make far keep we’ve to – wins kind to successful is

Nathan Jones

on. much will pass for I Great. Thanks questions. it my taking very

Operator

you. Thank

Capital question We from now will Markets. Deane next our with take Dray RBC

Deane Dray

Good morning, you. everyone. Thank

Scott Rowe

Good Deane. morning,

Deane Dray

see in appreciate your chess military but comments take the and the U.S. exports I ramp-up is move you boost terms given what I opening Russia, background, Flowserve I’ll going of There for mean to pieces for in in your also Flowserve sanctions if potentially? But forward our mindful off-line. some are unfolding have Ukraine. energy But those probably more that what to likely production. insights special to I’m going imposed guess about in on questions events might were be be allies. the we a Scott, we does would

Scott Rowe

I’ll that incredibly and the most reiterate We start to outcome event peaceful again, happens it’s comments. Sure. unfortunate an here, my that’s Yes. just unfolding. hope truly

have answer on because we potentially a question Russia what potential sanctions the and for that business as sanctions first oil I there, happen. situation on future bit little with have talk I’ll then And do what think Let we me about what have what gas could Amy the our well. – sets the geopolitical to impact or scene in

Amy Schwetz

But a amount. relatively a Yes. in developments it’s in to terms us, Obviously, monitoring continues fluid for from of be small a situation, we’re it sanctions pretty perspective, emerge. the they and as Russia, business

year. had into terms have million sales million generally Russia XXXX, That representative in We sort Russian of exposure. one does a $XX a Russia, $XX, X-X, about to of another from exported about of QRC bringing perspective. we business business that million of $XX about number In was worth in OE an

Scott Rowe

Yes.

directly, in the does to like again, So oil. your of our world huge a three Russian play is exposure question situation, in-country the number And forward, Obviously, sanctions gas. natural And producer right? two are producer but how fluid this for and Russia They producer of it’s impact the us number is Deane, small. minor then a relatively are answer overall. the relatively a

natural get will to depends figure right? got standpoint, so export on which an the response, has America, what oil I happen, America. well And it’s then Middle growth it the If locked and getting And the gas. is are in Middle offset just where probably world incredibly this we’re there and they think out from down North the North positioned for East suspects East likely of and and the

while itself. North Russia and on severe go year, sanctions some that so, And big had for a up target the for America given we Middle this would only East

probably place hesitant over I’d benefits if they in, what then positive It think a net of little long-term to won’t there. the it’s going and a so Flowserve invest years. But have and And say Flowserve kind to this, take happen the immediately. for the you from to I’m investments coming but say where long-term are

LNG, natural talked Europe that natural gas XX% component from about consumes is it’s but or to really the into Russia. coming gas Europe. is, you’ve other got get Russian I right, gas, because to export of currently roughly – XX% of The Europe’s

do to liquefaction And support side only about that and get side, valve the way LNG, else, from offering we’ve the somewhere got that. got have they to the of to before, side and is really talked liquefy in as good specifically it pumps we’ve to seal a the the and it. on So

LNG And so to for starts as super business. grow, helpful that’s our

Deane Dray

and really Those appreciate it. updates, I are all helpful

in you follow-up, in a January? the any for might price actions color so you that on you the XXXX? benefits actions took can then took what pricing beyond provide carryover that And us And

Amy Schwetz

Sure.

start Scott with follow-up here. I’ll So and may color some

in January, with increases which we on as we X%. talked going the price third was at had of three effect XXXX So Xst about, into

increases So industrial business. MRO our shorter-cycle the seals price and of these component products, so cover parts, our

The than on projects is really generally time. the today what I that’s we and and highly in in other what that had are business about margins our engineered of higher backlog – customized part the say engineered last have plus, cost this that And our orders. that backlog year we is at can

to mind at Now the keep of of pricing in height agreed that the was element this pandemic.

some of the priced competitive even rates. very we revenue and QX QX, on height of at recognizing those at look pandemic are XXXX, we as products QX so that were at the And engineered into

in together, at pieces to actions we’re us the XXXX. that business wouldn’t look price/cost, order I’m to in of neutral. can well far stay behind we two say that confident we’re of pretty those respect we’re need that, ahead taking and but I And with we’re confident that that as you overall, that to not So know, position we I the

Deane Dray

And also points percentage increase specific price, January. hear. to lastly, a a good That’s And comment. in helpful. I appreciate of hearing that That’s just X then

the there free think was that, potential but through. and especially you on Thank coming Flowserve finally, congrats there, being flow, it’s really and followers team knew you on to a have job And you. above XXX%. past good the I years of it X a the just that all done cash up. keep Long

Amy Schwetz

Thanks.

Scott Rowe

Much appreciated.

Operator

you. Thank

Credit from next Walsh Suisse. our with question John We will now take

John Walsh

morning, everyone. good Hi,

Scott Rowe

John. morning, Good

John Walsh

absorbed these question, can we you’ve of like conversation at the I about think size first as Maybe margin midpoint. or ‘XX? kind to, of X.X% operating you that’s part in think costs your dimensionalize that a here maybe bridge it’s And frictional

of And frictional we other margin year-over-year go you talked there Just want of backlog Obviously, kind year-on-year. to can any to bridge understand as you I’m point being up things profitability. some think costs these to? how assuming about away. about the

Amy Schwetz

Sure.

really So, our a of backlog in look driven of QX revenue But think rates. XXXX, conversion combination now that, a that QX to size under-absorption One few we we is with lower we to it’s forward the are margin our performance being and things. levels. by point about as level at and related a revenue is

had seen quarter, for the have we that XXXX. fourth revenues quarter, So have we quarter, would the relatively fourth which the would in converted been our example, in our we seen with at conversion overall expectation historical have rates into flat going

costs we think as Now, are, what element frictional cost margins, about they these are structure. of impacting they the but temporary a are

are improves, that look start our on of fees in really in at costs the And spending as supply what and and we consumables we things ensure for need. see to conversion these – order XXXX, quarter of we some midpoint, the point and rates for are system over sea these versus redundancy and some this and in terms parts some the happening normalized both have are to impact more in quicker, get are margin move as paying that what that instances, airfreight bring XXXX is second quicker, on that production to means we our frictional you the at to we using ground spot our expanding year of or factories out chain. to a of the expediting the that margin the get our overtime these in order facilities as at year at looking course rate we that that see into we products So, like into rate as of the rate paying,

course So, of midpoint year. the much that or think to income margin operating the different average exit full is the about going rate than the look as that XXXX, average for we for

John Walsh

if just of you orders to a are sense. out Got would XXXX But and think of I sense I given a if Scott, be you it. heard just heard I And And that high-single I the I digit end long-cycle correctly, your correctly. makes be said guidance, that you kind case, maybe just that lot want would going a are follow-on, midpoint assuming of Thank backlog No, make I rate. then if run as business. which that a that I the higher to orders sure year-over-year, with makes think up think is you you.

Scott Rowe

Yes.

the do come MRO but then so our outsized bookings project anticipate are we grow, growth. spending that going currently, this projects just to the and the from in. think going high-single return aftermarket growth the digits longer by expect And than going at to of is through higher So on XXXX to build overall definition, continues And comes the take end They are the we backlog are – cycle. get they to at at to longer the beginning of ending longer back, – year to the and year we of end of and year. take the the

John Walsh

Thank Great. you I the taking questions. appreciate you.

Scott Rowe

Thanks.

Operator

you. Thank

We Halloran Mike Baird. our will from with now take next question

Mike Halloran

everyone. Hi. Good morning

So, a on questions. of earlier follow-ups couple

ensure businesses you just the First, Nate’s there customer And how broader a is people there focus loss channel as the transition both unified as the the it? I with, that in do about Maybe simple as so there to up so or same pursuing of are the strategy it is traditional the are can And enough is first of things? you think the those have think question not a approach, that more is? you go-to-market you some overlap, energy and is something there comfortable hitting that same side. feel thought structure when cyclical you on more opportunity how on

Scott Rowe

Yes.

is So our right. of facing. been Mike, It’s is the with is team question challenge, the Directors. big Board our leadership this what this And

we want actually really is And existing over to have be way recognize be very the the so got different, not for years to walk XX is and But nicely we couple pursuing years, pretty positioned we core and going business are change. believe the And that this there. can’t customers out line, also that’s the from grow the to world markets X and the next we away have years. we down to the do we XX of going that are years,

And the are needle that needed, sure that strategy so what we from we we with sponsorship teams standpoint moving allocation we make where is are are to doing think is the resource creating designated a and forward. driving executive

an would So, of team. our be that example Energy Advantage

mentioned team their And in uptime efficiency, help a our them prepared energy so them transition, that’s their for reliability. But this through their down and remarks. is looking with opportunities that to to I designated now to COX their improve emissions existing and to customers down the help drive drive

And in these with to more have that agents, together offering. pulled out water the associates are some but And in also all of to our particularly some really then existing in teams within we we go the diversify, Energy we our are them augment have Flowserve, existing others. the do to combination launch similar and Advantage to aligned so of today, growth we a will distribution associates to get through that channel of refocusing but water. and And going

allocation we and combination. be this that sure that space focus say then biggest people complement will internal potentially investing it are the then in challenge future. M&A energy, a time and and our product dollar you and of and I would the development the probably with So, us But make in is allocation resource to the the for that is of

Mike Halloran

equipment about you And tend the these when consistent how the it quarter, main like, we points that it for that comments then you margin towards on profile the look how specifically skews original that felt But margins you mix costs the call there mix, adjusting aftermarket, or transitional are about plus to when little a incremental back the the of historically, Fourth look relatively the sense. line, aftermarket Makes on on pressure levels, on to margins business? on margin side? you historically Is it, tougher it better. the, seeing made, revenue think headwind. based think on were should are combination when

Amy Schwetz

remarks expected that again, And we about really it’s the aftermarket things Mike, of a we question operational facilities gross favorable that, and mix of particularly segment in performance comment under-absorption And had, that you talk FPD’s some that the as to were we in we the OE something, – reduction greater course, made over large, these we far year, in But at volume years. internally. course look other I lot experience prepared a used a couple what that. a highly these margin saw of is my which It would the and that at facilities, great about engineered focused saw is to that as the and look XXXX are of in have efficiencies. projects, than between levels one, that we then large overcome on

we chain XXXX a are been look a but goods. our have I as of that that our of And types some those more our electronics the relevant on on, FCD, mix soft so within supply And in say, issues products. in will see that mix, move than we components will, this really they are at motors, there and lines. you availability, as And of pretty margin And of we the of product highest comment if focused and we we is and the then want improving products see have really that terms into had terms into is significantly. going it other project in I thing within FCD actually, is spend, to reemergence

we as are have that those in there not well not to involved conversion that And to periods. its those is the but we margins of lost backlog see that frictional out, parts margins. this, business they look would nice we our costs we got order into we the so perform And backlog are continue some point have revenue, enhance although of deferred actually we at way makes backlog, because revenue as future we forever, as to in when margins, to our seen where – portions see like frankly

Mike Halloran

all side the the the fourth on One With pieces in Great. how the what interest think was moving I may. did you expense should ‘XX? last, debt to we quarter about and the if work in interest side,

Amy Schwetz

Sure.

about we were late are execute fourth pretty about and able quarter. the – into we the third So, we to in excited deals quarter the how

$XX We million are range million the expense the XXXX. of course be will to our anticipating net $XX in interest of over

Mike Halloran

Really the it. Great. for time. appreciate Thanks

Scott Rowe

Thank you.

Operator

Thank you.

with take We Joe will Giordano from our Cowen. question now next

Joe Giordano

Hey guys. Good afternoon.

Scott Rowe

Hi Joe.

Joe Giordano

at pricing up, as you was you guys that mentioned, projects to done talk about – starting the recognizing margins, are on different we So, pick now, projects as and a I your were as know delivering are as are a and – time against and very percentage. negatively we aftermarket goes to through in new it’s the But still as mix competitively. just that projects impact P&L, coming going that

progression? think expect might does digit does the like towards in it a not cap, expansion how it but should So, we like growth growth? Like mute margin put margin the high-single about a – we

Amy Schwetz

Yes.

to we related about from that talking going stair volume, in am and a – step on to overall, to at is our that absorption I I actually really XXXX. – see we therefore, we our [Technical think favorable rates The are, the second absorption that and benefits, specifically we the pretty both over get will quarter say benefit have I hope to volume conversion of we margin. course those And in and see of So speed conversion about when Difficulty] going those revenue item the is that also to getting year, improve volume and large the from overcoming continue we benefits perspective, we we are the the tailwind see know of friction that course project a the over as in where mix revenue I want XXXX look from hone that are rates just the of are to our work mix might still the to that bookings from that the element see the up but elements.

Joe Giordano

in now? Great. the this how to curious capabilities I Flowserve, as you really much for am make this are you are you of $XXX million on just And at like Like much next an talking that I year. in then you when $XXX million that need XD, diversification, have guys to bring important think do and part pipeline about – don’t looking bookings year, right of how of

X% it’s but win of XX% you third say still It’s less essentially, Let’s sales. growth, of that. than a

So, in do, growth is make to – a hard really do XX% real have is for like do we investors to But we good. to really revenue, stuff? make because what to outside that significant you – a part bring How it centerpiece. have have what do we do do to this like of

Scott Rowe

Sure.

I think we are well. and potentially investing externally internally as

there. today. as We of And decarbonization. continues about And just fastest-growing let’s we that did is this this we we out just segments that so think grow. have one We take $XXX – believe think million the to

then think X becomes potentially we could think overall. And Flowserve our offering. this something be you acquisition, substance for CAGR that do meaningful if or we high-double how make new believe so digits we a sure. it years, next for of about if into the of And part we then can We this the an introduce think – products

now, committing And are so internally. we right

weren’t gas they got have of helping is equation. understand our side the we board hydrogen services and offering. things They with that before, focused go new towards energy of some markets. offering the transition combination that on as of are a forward. the are folks the both we that They geared And us more and understand We in products

outcome good on million, growth we $XXX feel us. good I this and very really – of are even Flowserve that for these are feel starting about today meaningful about like I then big the a So, part already markets though forward. And at becomes going the diversify,

grow water diverse think business. And the That’s and $XXX you faster again, Industry portfolio. General over than focus If that’s to the in is today. here million to overall specialty that segment, related a our more chem

specialty we the And have targets got some same business. the there pretty water side, big experts growing We of are and that side side. thing, around investing chem in the

We repositioned. our get are going to products invest in how we do

we we We expect go X grow and years, that to have to now as that been continue for doing forward.

Joe Giordano

use to you your question, products If I like one in the sneaking it out you not me pay embedded of or it of like stuff capability this Whether capability on, it don’t last curious, how your for or going actually mind have has the the to are it? different or this? am but what that much decides on just turn that’s percentage RedRaven. use door customer out going one

Scott Rowe

Yes.

turn products decision is and ready to right customer seeing at type engineered-to-order a instrumented that the are So now, low. that we is on the Where relatively product. be would

service catastrophic if highly are an they operation. So, that’s critical then downtime that think big critical issues, operation to pumps to have their

would the than out portfolio. and those that’s on and I X% say so are going less ready enabled. to But instrumented turn overall of And

forward to as future ramp Our into years. start to that goal go is up we

Joe Giordano

Thanks guys.

Operator

you. Thank

now Brett Mizuho with question Americas. will We take next from Linzey our

Brett Linzey

good Well, all. morning

Scott Rowe

Good morning Brett.

Brett Linzey

Just wanted of are cash to flow the teams then of on finer come how certainly out? about just just put called a basis, the have this one-time But a made. inventory to And use progress thinking comments point conversion back in a that could Is the free the item the you echo QX and cash? regarding nature? you on some be year, considering year full will you

Amy Schwetz

Sure.

we So, cash which a which out first of is was the item, tax of and in payment discrete QX a year. two the about that I called $XX is made month large non-recurring foreign million. terms in That flow, one items of

made compensation first The incentive of the our of this second year. – first timing in is a of in was be week April which timed That plan, the week of March. or generally will week last

So, relates of range made free impact will in than delivering cash between flow it to really we for XX% for believe year we bit that will we may at that cash full of capital not necessarily project difference to some caveat related have investments, the some that XXX%. around will progress, working as – range. but growth, large we return to my flow. a not range be Flowserve. particularly to We or better are are genesis anticipating two items that general, little in two But be the there we to And to not free as XX% manage have going be related XXX% orders. recognition that the the QX, is necessarily that in we that a discussed is ever that of to and I that And items these timing, that’s some need but

Brett Linzey

there. Yes. talk those bookings, some That you all distributor about elsewhere? see Is are nature seeing? channels activity that replenishment the demand, you makes very sense. it immediate are And are steady of just you in satisfying just to Could on or the orders starting or aftermarket improvement

Scott Rowe

really It’s the Yes. above. of all

really aftermarket on right. it’s so the asset about And utilization, side,

churn as large continue the So, facilities and just operate they through a then refining petrochemical – other products. consumable utilization at plants they and rate, high to

It’s us, mechanical our get valves business. in so we seal. ultimately, pumps And the It’s parts well. in replacements for parts And as that’s then our business.

is with what so business kind mobility, the seeing And high certainly of now increase coming and world, operating everything at levels, around following we return COVID, are there. just our is of the GDP this of the aftermarket reasonably suit out

the stability to that. two, with ability one, really then, continue we so just feel good growth And to of And progressive nice, steady have a the about, aftermarket.

how And kind curve seems so we services. focused that up of the on maturity do of incredibly move

from agreement into with into of And life as instrument to and move long-term then now to moving call-out all our we want opportunities providing just parts expanding right. ultimately, we products, seals pumps. cycle agreements, so move services service our solutions, and more And to

uptime, with So, helping reliability, loop customers our flow optimization.

have that to And a we up path that just service ability solution to more that, we confident this just before. our a I base a has. again, I confident and and revenue is significant of think clear continue provider to – And installed Flowserve got to are maturity am ever that than from am I generate able that so advantage become we And and to this grow move the continue curve.

Brett Linzey

the exposure, O&G is today? last East and exposures, And how Great. one just on the of your much U.S. Middle

Scott Rowe

of gas am and the exposure? I sorry, oil

Brett Linzey

U.S. roughly? Of how is and O&G Middle much you the for Yes. percent or East the bucket, millions, guys,

Scott Rowe

the don’t Jay, number I top that? you of have have Yes. off that my do head.

Jay Roueche

overall that East much North chemical. that related be oil a Well, of percentage gas to I probably clearly the different America, suggest it mix. not would and from Middle is overly and would higher

Brett Linzey

Okay. Great. much. Thanks so

Scott Rowe

Thank you.

Operator

Thank you.

Ritchie our take question Joe now Sachs. from Goldman next will We with

Joe Ritchie

morning Good everyone. Thanks.

Amy Schwetz

morning. Good

Joe Ritchie

– like provided was, understand have you lot that which really, know So, how I and do guess like will what XQ? have based margins comments, my that around a first question impacting of impacted good the X% of qualitative of that be that’s you I frictional range. like cost. X% what the around is I XQ a I And curious, XQ guys really am to trying kind of the am – the like quantification is guys like kind number on detail much margin, it sounds to just

Amy Schwetz

Yes.

So, bit are what I might little a about again by for we just anticipating QX. start talking

with to to anticipating of respect XXXX, QX, earnings we are only we to sales anticipating XX% flat with but from come going are about our XX% is relatively So, QX.

to of implication average progression look give far QX that’s and higher to get exit the the degradation the call have an are started obviously, at XXXX So, steady year we margin and discussed we we that are where from than the course where of us obviously then that level that ultimately starting at where and as the we we than is the on us today. – over QX movement into rate

of what supplier one difference versus of other. an significant these in the a decisions versus our transportation modes of many in the to placing on seen lead what’s general, the because rates between Some as costs, time, frictional pretty of an transformation order improvement making are of are buyers with what’s have choosing costs we our are to another based know with difficult transportation buying, mode of We calculate the in increases result terms our respect activities. actually And one cost of know as we have logistics that example. of seen

work not to are them the through we So, that we order remove to from going frictional need to real. XXXX, what quantified as make to know other way in And expansion. those margin we system costs are are have they to our realize say that we than fully

Joe Ritchie

to one the was revenues the XXXX? it. And then flat XXXX Amy. just said, it Got versus clarify That’s thing right, number, you not helpful,

Amy Schwetz

that you. for Thank you clarification. That’s correct. Thank

Joe Ritchie

nothing this to And – Yes. SG&A Yes, worry. thinking Okay. about just then like opportunities. the

as think of So quarter. sales leaner how Is you like a terms maybe structurally I obviously, structural? do SG&A there target percentage of progress for where longer a potential there what like lots in you made drive maybe the – of be buckets can am in just curious, about term? there the can fourth like

Scott Rowe

Sure.

get the We with work in before to that And are I really over – our our said Flowserve you SG&A. is is structure have downturn. we at that have think I really last what say – still go XX% target to looking into as there. would some taking X.X, the cost

done have good work We a lot of here.

able want business. And so right to be now, the we structure we to grow as leverage we the that have

we very confident my to ability back So, are grow. in remarks, our to

digit We growth we forward. are high-single sighting as go

that And But and we so for the and we ultimately get – have it’s what XX% is a really to. the to that’s desire that this about good infrastructure business, there today. number, leveraging folks

Joe Ritchie

great. Okay, Thanks guys.

Operator

you. Thank

our Damian Karas UBS. last We with will take now question from

Damian Karas

have And I I in Hi. what kind the comment look year, you and growth to could February to trends earlier. if what year those the expect issues you discussed. lapping off it the that positive you start positive bookings of rates like saw first you up bookings rest thus Good of quarter being of anything far? as last would morning your inflect comps? on second tech My already having the relates But everyone. up apologies as looked just end was bookings, doubling January Well, some on those

Scott Rowe

would off say good I our solid reasonably a start. were were to Yes. January bookings and

so first quarter at get that the be And you don’t we typically, I some that would see year, things and that. see But you in of bit the out normally the concerned of take end did get there. a anything pulled little

January start. Our to off a is solid

outlook converting true Our MRO bookings about were there. that and And the we bookings. and kind of pipeline back projects, to this opportunities to feel pipeline of good pretty

Damian Karas

Okay. And months. the comments commodity a over mean couple reasonably is which Great. year, expecting you made Amy, I bit, earlier that have we prices seen the interesting. get steel lower I prices last you are kind of stable of this move think

tailwind key one about material thinking this you cost last there maybe any is think just your have of on some I margin elaborate been year, exposures. expectations of whether that’s could potential materials just your pricing large and year? maybe commodity those where But

Amy Schwetz

Sure.

through in number increases I of So XXXX. saw – anticipated come perspective, an a general, inflationary in we from those we think

increases would think a think going again a are And from year. to don’t perspective barrel commodities, have expected continue of coming $XX that that again this large were oil point really we area getting an been we closely. we have that firm that the really that I absorbed or so there we are that beginning at we our I of number the monitor And in those see I quotes And are projects. that on projects XXXX. also, It’s out to an obviously commodity-focused,

And in so we prices. have locked

year. we perspective, inflation be can element about like with overall, that feel watch that we will pretty I as hedge and see as from for forward to There So, respect to we good that XXXX. we to we ourselves supply give But out of the go inflections obviously commodities frictional through the blips, any opportunity much we look a to chain more the versus am – those. continue worried

Scott Rowe

just us point, and has will that. bigger what’s raise disruption, we structure. have we it say freighting, all incredibly Amy’s That’s We If frictional dynamic it the just impact those has a to overtime carefully. our to been situation. up, go that the prices. the But really would And been really I expediting us. good with costs watch for the hurting concern an commodities the handle the air continue Yes. cost of our of

will And turning to continue watch our on cost the impact price/cost. will at be neutral to We commodities that to hopefully, we structure. positive that right line, continue

Damian Karas

Thank Understood. you.

Scott Rowe

Thank you.

Operator

This your concludes call. Thank today’s participation. Thank for you. you

now may disconnect. You

Flowserve (FLS) 24 Feb 222021 Q4 Earnings call transcript