Earnings call transcript Q1 2023

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Good day everyone, and welcome to the Q1 2023 Flowserve Corporation Earnings Conference Call. Today's conference is being recorded. At this time, I'd like to turn the conference over to Jay Roueche, Vice President of Investor Relations and Treasurer. Please go ahead, sir.

Jay Roueche

Thank you, Linda, and good morning, everyone. our financial today results. joining first discuss you XXXX quarter appreciate conference to call Flowserve's We

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

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

These an many contain reported will, that as our are a press materials to our available are statements As website and of which do, the this uncertainties, We forward-looking include reconciliation accessible in be beyond safe expectations results, will control. and information are risks XXXX, non-GAAP our is Investor included event well replay company's reminder, encourage call review Relations and non-GAAP to measures of and and both as which earnings our you presentation, both and measures available. on statements. webcast of this forecasts, other upon section. the being our audio of Please X, based harbor are involve May release note the they and our management disclosures earnings and at as to

prepared and call I Rowe, President Scott turn for Chief comments. his would Executive the over Flowserve's Officer, now to like to

Scott Rowe

with you very And report I us first am quarter, solid Jay. strong first year. for pleased start the results morning, Thanks a everyone. quarter good provide Thank which to Flowserve’s to joining earnings call. for the

improvements positive for associates supported the momentum the came performing XXXX $X.XX, to of in customers. by EPS to efforts XX%. adjusted our further quarter at continue driving the in build company, the across revenue quarter our operational fourth year-over-year Thanks while First created nearly we of on growth

trend historically seasonally but drive in been and has given this more action taken impacted quarter year, period to in consistency results. most moderate first our The we have any our

to strong commitments. this last team finish year, paid not only start the we was a quarter The effort. margin great we deliver to segments strong. also and team's ensure are the but both in first exceeding bookings outstanding their to Our the our year challenged performance efforts delivered that In results begin opportunities to as a XXXX, fall of off revenue maximizing

us our full The and to ahead relative of build results the end markets previously encouraged a positioned throughout We about by creation value well announced solid growth to provide year remain our have first upon guidance the are year. and quarter in optimistic foundation us. opportunities

the differentiated I is and for others many that in am and from Flowserve positioned well industrial XXXX we believe beyond, confident landscape. are increasingly I

solid remain end healthy, billion we Our the and consecutive secured markets for bookings fifth above $X quarter.

fact, since at XXXX, funnel across by is two all key now driven level highest project its industries primarily our projects including catalysts. In

heightened which driving First, levels an the energy activity. on increased there is globe, security is around of focus

ago. in significant significantly energy. For up project countries example, as less a fossil LNG, developments, of nuclear, our gas LNG regional suppliers they power dependent we year seeing look were funnels become where unreliable are foreign plants and on and from are and investment nuclear Today, oil to

continue regulatory our various Inflation our commitments area by to meet look through of We is in United customers year beyond government expected driver growth primary ESG Act decarbonization. spending the the comply in as this further This second incentives, this to The will is and States. their believe accelerate supported Reduction investment with and XXXX expand changes. including

carbon activities doubled like and and has hydrogen, now XX% in decarbonization capture, the includes project like risen the Our as funnel wind and nearly themes projects two and end security strategy markets and our the both at transition. energy energy diversification, as sustainable existing of beginning infrastructure. global decarbonization solar, major and XD since and well year, of decarbonize intersection traditional to truly leverage energy These Flowserve our is digitization. XXXX of

This backdrop, customers XXXX. continued cycle spending, order support the expectations for exposure momentum and our positive Flowserve's, with of combined capital our in late direction

actions supply we chain the improved results accountability, stronger the these functions. with environment decision the Additionally, of believe manufacturing will have the year environment, execution significant the supportive processes operational focused last improvements We taken seen better market current and to streamlined have on continue momentum enable to in quarters. of last we improved across making, and further over us to on two combination operating operational to build our as platforms execute in drive

gross XX%, progression line towards revenues adjusted delivered quarter highest of hurdle our and price $X sales to of this nearly first since this growth important billion over cost absorption an Flowserve leveraged quarter, top level margins deliver We Flowserve's XXXX. for improvement.

the incremental of XXXX revenue produced billion. This quarter solid in quarter. in our growth our the and now expected and our Flowserve margins Notwithstanding drove first which sequential operating increase $X.X we performance, sits revenue adjusted the was in XX% positions book-to-bill a remainder of since XXXX. at backlog, XXXX, for X.XX strongest strong Additionally, foundation,

XXXX works the We Finally, our we backlog from impact of the price booked lower margin increase benefit that increase should we margin periods further also primarily expect as higher was future business, replace its with X in work are we to project way in margins our as in system. through winning it January today.

year's million. sized provide quarter quarter now $XX $X.XX strong in the orders. some at and from on $XX benefited first between additional last while billion, first four million me Bookings bookings our color Let remained projects

ongoing our rates this been to MRO driven and past utilization Aftermarket by seals growth Aftermarket record higher Our ensure our remain of year, high requires supported to and margin Many are running maintenance close facilities their Today, geographies. their and operational awards. all productive. business which the spending over FCD strong bookings assets were at MRO by levels, bookings year in have customers and across

activity throughout see and this maintenance this and upgrades it space, focused in of slowing We expect no see at turnaround, point, including to down. solid efficiency XXXX, general we signs

the midsize markets gas pump three for the bookings were range, in $XX awards oil million primarily and million project both equipment. $XX largest and included quarter's to This in valve which

We and energy a in regions markets the $X our smaller transition level included $XX bookings core of also booked several end nearly million. of represented range that and virtually of projects million all record

As markets constant and and in compare of oil $XX year's a million quarter bookings down result, respectively. our while bookings first were award. gas project chemical currency included power the our industries and growth nuclear which general XX% tough we delivered XX% to markets, and a Due X% last large

This of upcycle. the XXXX delivering is bookings with $XXX year of level despite large headwind the year. We similar to we are continue at booked fully [inaudible] growth. potential for that year million we second in a anticipate We a the the to what believe multiyear project this last comes additional

to we backlogs Later cycle Flowserve for further in with results drive first Again, revenue increased aftermarket project XXXX. EPC remain X.X resulting our investment, our outlook. continued full over this growth book-to-bill year in in increased should year, are the growth MRO expected are again quarter confident and backlog position and we that pleased and

decarbonization is with term the two tomorrow, over initiatives, creating that XD supporting of security the we our well long-term strategy quarters performance aligned Energy the including and and traditional right the the affirms Our the pursuing our and we investments are in visibility customers. last of believe energy near XD transition critical is to growth. expected implementation strategy

remainder results over to With turn XXXX and that detail. address overview, for financial the in expectations let first Amy? to quarter call our of Amy me our the now greater

Amy Schwetz

Thanks everyone. Scott and good morning,

at in detail. financial first quarter Looking Flowserve's results greater

efforts our pleased expectations the team's established we that fourth segments results. prior thanks are and in period, both our the quarter We exceeded these to to the for sustained momentum deliver

improved the record cadence Our delivered billion adjusted and that and $X.XX execution better on our near leverage EPS revenue of demonstrates drove nearly line as stability we of operational top backlog. $X shipping on

On by per aid FX realignment $X.XX. quarters in EPS quarter our accounted month disproportionate costs quarter's the in This any trend reported acquisition this represented for write-downs totaling of and the effect on asset a has was even better quarter and for revenue which income. the the XX% basis, contribution of was charges $X.XX, announced discrete first adjusted between results. our efforts to will adjusted that in noncash over traditionally This a impacted XX% primarily and obtain year, the March Flowserve, XXXX. At quarter's balance share operating last more of Velan earnings monthly balance. of period's

constant prior XX% respectively, year. versus increased First year-over-year with basis, growth XX% and XX% FPD revenues respectively. XX% while revenue quarter of a both growth, of on currency contributed Aftermarket delivered and OE over growth XX%, and over OE and increasing aftermarket XX% FPD

the mid year-over-year with while XX%, America, basis, teens. up across strength as in all high up East region the on notable in in Latin Revenue well and the respectively, were XX% and as to were where Africa Middle sales regions a other increased globe

were point FCD’s year's improving gross performance. an on lower margin Adjusted FPD’s delivered recognition supply now points offset increases. to our expense of lingering strong as the margins XX.X%, and and volume increased XXX where pricing based margin enhanced Shifting basis to Benefits year-over-year that our well XXXX, XXX last booked leverage, was including increases as in backlog environment solid improvement. from chain we increased by basis compensation partially XXX

we We are anticipated, actions pleased margin to this maintain of and and margins did earlier and gross are plus performance. our the year initiatives improve originally in to gross level designed have than delivered XX%

Russian XXXX to On to gross basis XXX addition in XXXX. in margins a previously, increased million mentioned of and recur basis, first points that related margin exit included gross charges did the quarter $XX first quarter where, reported XX.X% items the not

to increased SG&A and million, discrete accruals, to R&D $XX legal due adjusted increased $XXX charges. million primarily investments expense quarter First compensation

as leveraged $XXX quarter our $XX SG&A adjusted million XX.X% On of increased a or of XX.X% million As basis, percent to sales, reported successfully points to higher we SG&A sales. XXX basis to revenues. decreased first a

also items asset. related XXXX. included $X.X costs which million acquisition is not offsetting the year, to charges mentioned to discrete expense also Velan a recur did SG&A our Russia write-down $XX.X related $XX.X previously, million addition of $X.X million to In that items of the in for million, the quarter from of non-cash was and of those exit last the Partially realignment

increased basis margin of to driving increases, basis FCD XX%. incremental adjusted point and contributed Our Both margin first quarter solid and operating improvement to XXX X.X%, XXX with the points adjusted FPD XXX a respectively.

roughly prior XXXX. operating significant million, well Flowserve start partially by positioned of offset million the quarter margin further was strong $X versus to and Our in XXX operating adjusted FX items where basis for X.X%, year-over-year the $X leverage in increase First headwinds has year success to reported increased year points

March quarter additionally, strong our receivables Our supply $XX of [Tech million. accounts change, previously rate tax first mentioned revenues contributed to Difficulty] fees cap

From versus prior use year year an of use the where liabilities perspective, including contract of was delivered for versus million. quarter assets $XX the improvement prior the and a an first we million, inventory inventory, $XX

continued our As bookings of modest solid supporting capital up basis a percent ticked backlog to of sales, points primary working and sequential XX XX.X%, growth.

our points assets percent this While increased our since XXX last over including to time year, of XX% as backlog, XX.X%. a inventory, backlog liabilities basis contract and dropped

the to continues and and of XX% our we capital opportunity chain a we sales. supply believe inconsistency as to our As further below operating exists improve predictability performance, to working reduce enhance the level in investment

working In loan $XX debt quarter capital, cash reduction. addition expenditures, in in first million in $XX $XX capital the uses to million of term other and included a dividends, significant our million

remainder margin year. our to adjusted through and the delivering for continue the supportive operating end expect capitalizing of the to Turning momentum, operating improvement year, markets our we and on recent EPS outlook sequential

of the target deliver of executed first $XX several our Additionally, for annualized revenue the backlog to record including billion, both near that end ensure savings plan in last we a With to XX% the year. the currency needed weakening address the the remain $X.X year cost variable by benefit We to committed year to US since achieve we are began. this steps we reduction the finalizing plans take to announced necessary the given the and structural of and range, we actions XX% now Dollar quarter during million cost. growth expect our modest to

midpoint. year full would EPS incorporates first XX% year-over-year represent our $X.XX of and the adjusted adjusted EPS range, $X.XX increased a at also XXXX outperformance to increase which quarter We the to the

roughly quarter, with. typically year last began $X.X our XX% we backlog to highlighted we any given we the backlog billion in beginning expect roughly XX% As of ship the year. of ship We

Velan, of and expect any EPS of approvals, through chain, further quoted A extended with large last return However, Europe. not ranges elevated. increase which significant remain OE from supply acquisition quarter issues times adjusted the in the due include as bookings, revenue coupled our ongoing and year's awards continue in with impact our note, an project do third we lead expected to to to now we work primarily the close in regulatory

targets special during as et below that such and effects, other year, well such also approximately currency $XX the line divestitures, impact acquisitions, reform the anticipated of tax Our exclude realignment the initiatives, expenses occur items foreign as million, of items as may as cetera. discrete laws, potential

expected first we adjustments, other the Excluding our $X.XX. $X.XX spending have reported and to range of EPS quarter realignment reaffirmed a

EPS adjusted market levels and and foreign currency rates, XXXX. commodity significant end reported at similar the geopolitical to environment range target prices, assume Both supportive remain also reasonably no the expectations for to disruptions stable current

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

traditional elevated to fourth both of and first given the adjusted quarter and third performance. to now we start year, revenues our line performance terms strong and our quarter more expect strong to with Finally, Flowserve earnings. with our phasing in quarter earnings And we anticipate second continue be in

our guidance full is balanced. we In summary, year believe

positive last guidance that we're current enhanced two over but some have range that uncertainties updated still the believe execute right reflects Our ability our incorporates within the we that importantly, the the in the exist Flowserve environment. created in Most momentum to track, confident and is quarters, on of range. we

to now Scott. me the return Let call

Scott Rowe

provide Great. brief transaction. Thank on update Velan the a like I'd you, to Amy.

progressing planning is shareholder that for Velan integration to well. our sites, more this Our the substantial value. Flowserve acquisition Associates are create efforts and right interact only confidence we with increases Velan's with The

begin to sites into associates, of eager products are integration We Flowserve. and Velan the the

world like talented defense for solutions associates and meeting service. the with nuclear, are providing applications severe many We committed challenging passion into a and around

fully million of We continue end remain $XX with significant to and opportunities at synergies the least to year cost combined we believe committed be to annualized exist delivering one. by portfolio, of the achieved

transaction the close. EPS expect following we accretive adjusted be to full Additionally, to in year first our the

than there transaction in original that we are and Europe significant the expectations, are progress third our now versus the quarter the we'll agencies in regulatory late prior are longer quarter. believe the that second approvals, we making expectation closing of While with our certain taking close in

in second continue. diversification, have Turning to are the markets, year focusing the XD decarbonization remain our the XD strategy, diversifying our growth fully rates to and enter by expect higher encouraged we we experienced we targeted as that portfolio the our the to our existing we CCUS, efficiency operations, with We and in digitization, world. on committed carbon products and trend These recyclables footprint. initiatives substantially decarbonization partnering increase capitalizing to technology include new significant while opportunities of offering and on advantage the with energy reduce around their with usage energy hydrogen, their customers their and lower

XD again first produced The quarter solid bookings.

of me highlight the diversified wins Let with now some pillar. our XD starting indicative

our example, rapidly sealing are hydrogen, for In extremely our offering including dry works well gas in operability were seals gas expanding their facility gas overall chosen dry an all European recent our stringent modernization improving this a strict uptime. We where and differentiated and Flowserve's seals In environmental for an applications, seals standards compression, Eastern hydrogen application. project. to enable expansion customer to meet support the while effort technology

the Flowserve decarbonize, for direct Texas. to project air scale pumps, and valves first in world's supplying based Shifting capture large carbon seals

expect largest this the on Following leveraged concept be project's kind will a technology tons of annually. proves capture is be to and the we globally. expected Once its facility the the completion XXX,XXX of have environment, this impact pilot XXXX, that up operational in plant significant COX can and to the metric

and are prediction to third our predictive make for monitored downtime their technology. of we now by of power deploying the instrumenting that of receive customer our services, commercialization, value that improve for four base number the creating progress we assets. encouraging provide drive overall to around renewal enhancing which assets monitoring customers offering, Entering more to on are world for their pleased assets. digitize, customers renewals its to Finally, with avoid ability year are and we contract were demonstrates plants continue increasing and we productivity receiving their the each And our data IoT even and our US. We in is is installed RedRaven, where monitoring analytics from by contracts

step quarter that type results the first progress delivering we were performance an and closing XXXX in strong our the expect In of to in important beyond. forward

we to healthy shareholders. for our convert plan and drive our backlog value sustainable on Going and forward, returns

markets and to expect provide continue to end to opportunities remain our that grow XD supportive Our business fully will we years for strategy the come.

Our and internal I strong team efforts XXXX beyond. and performance paying off believe this in are that will deliver

transaction forward completing the its about look We and benefits. the Velan recognizing pending to are excited and acquisition

we'd drive and I summary, Flowserve open this to prepared right like Operator, In concludes shareholder questions. to to believe value. heading the remarks the now rapidly is call in direction our enhanced

Operator

Instructions] [Operator

We'll first question from Stanley. Pokrzywinski from Morgan Josh take your

Unidentified Analyst

This Hi, team. Toby great quarter. Congrats Josh. is the on on for

and the we given XQ? the be Would due So should seasonality yea, any drag way? there the of about from throughput strong how think past the for rest along backlog

Amy Schwetz

expectations initially said, quarter of which So first the being doesn't rest as to today. given we to in starting backlog execute create what a were bit just really we'd year. backlog where resulted little our revenue performance, able we on first were quarter than on for look anticipated at pleased our the drag exceeding revenue it's of our the year, at That better the of a strength year, for our be the it the

strong quite quarters of and the EPS year, the like what fourth we with to anticipate to first year in started year. quarter, the seen our And first way for expectations So plan landed in how we and given the the however, through and we more quarter second where third fact, delivers of the to expectation, as we've is an EPS goal quarter would look the year, be improve years. convert the productivity from the above our continue to and make three of but continues we the the in an

Scott Rowe

Yes, logistics operating and add, improving, so environment just the chain supply stable, environment is more to is the better. is

and challenges better, subside allowing and And so the performance more productivity operational on get it's deliver as to those revenue side. planning our us

So a capability lot here. expect of great through backwards to we we QX. lot QX Amy’s work we as the QX a and look our QX not is go to and to point like to We did progress capacity, and year expect our in what unlock

Unidentified Analyst

about And the table? margin we Thank in with the on range cycle? perspective, the some really are for the then thinking closer helpful. from of like That's friction a targets mid-teens you. prior to it headwinds Should and be margin subsiding,

Scott Rowe

Sure. we We put ago. owe out. targets. out the that Yes, we definitely had that new years several investment And community

So just anticipate get say QX want term would sometime putting about I for through targets, that and we'll us to to know that what we long let targets new but we definitely and this year. do need do out we we talk

Operator

next We'll from Citi. hear Kaplowitz Andy from

Andrew Kaplowitz

Good I continuing any impacting there versus everyone. and were Is giving as flattish over Scott, you quarter still you of morning, posted pause bookings $X.X suggested anything in last maybe the do bookings having But that are seeing I you're in you think with you you you you April? or signs year. And bookings, solid incremental billion you bookings of could in billion today more last customers growth $X economic see in see and/ mentioned had ‘XX. know said still you terms conversations weren't again, said, weakness bookings. that of

Scott Rowe

million. award a of year, concern quarter pause third at award, in only had or that [inaudible] Sure. giant last $XXX we The is the the

is, plans the if were at kind we the higher. overcome number? rate big can year, at same last that our question we right And not now of to say And be I just would are that so

it million kind continue the We're MRO expect a basis that to and quarter we record that's forward what $XXX that we we and seeing need really we that sign. the bookings really break we're is and in if aftermarket go at as and good then so And and of about projects. so for down so provides just

funnel. got so to great our visibility project project we've And the on side,

is future. in right. we're are we into what at would level the now fact, selective there. a to going say of are it's There record larger I projects In of take, XX what looking incredibly out about terms handful months But

$X.X with we're the that the so right to And be margins selective we it a we billion believe jobs. allows deserve more facility right and executing as us providing getting these in the work complex backlog into

pretty the last or be I year we'll go determine activity So depend to about above feel forward. good outlook and on will and what right whether the of our just project at we number

And think to there's so exceed a good real chance I it.

and side well drivers, the see then growth this we I are year. security that the think we're the the really the most to two energy and positioned lanes decarbonization back

Andrew Kaplowitz

said you chemicals QX. general wanted last year-over-year general of impact I Scott, in just up to even And I industries in are could in up, us down chemicals. quarter, I that X% follow you think you think industrials I said And bookings January. terms think chemicals were and and told recession in XX% But European that

are specifically been seeing out you a as some market. chemicals what peers have in particularly aware, you bit are there chemicals So of weaker probably a talking little those end markets, about

seeing? you are what So

Scott Rowe

Yes, the a so some We've seen chemicals bit GDP like our industries. Gosh. strong print the of that's based general be chemicals But concern a was growth now. on quarter our little would comparison. in year-over-year in of markets

chemical quarters it's we've growth. think where six I almost booking seen been

watching we're a preparing we GDP QX see. slowdown will slowdown chemicals recession yet, we and a any slowdown we We're for energy But net-net, so offset the be planning and this decarbonization for. could be would kind cautious again, potentially the it. And haven't numbers, that and Europe but we about out General we're point. industries slowdown bookings perspective. there, seen so at think that potential that security would our of in area But seen would today say I concern the any second. from driven that's biggest haven't

Operator

to from Baird. We'll move Mike Halloran next

Mike Halloran

questions would is a everyone. your softness. maybe time if Scott, maybe strategy on of side cycle for the there from in going some spent disaggregating traditional cycle good space, more behind ability confidence the perspective Hey, hear flip the also up on you following but about the the transition energy in the in there, space. lot talking level the over to about like that the Maybe Andy's decouple energy remarks Obviously, mind the that's some of of your morning, talk to energy prepared in on the economic in side

Scott Rowe

seen just I'd this decoupling in by prior start Sure. saying cycles. we've

it's Sometimes decoupled. times aligned is it and other

think industrial a from biggest I And the general we'll so what decarbonization. decoupled GDP/ drivers slowdown. security call we're And and again, two energy are

one and would lack significant just third XXXX The be the of in investment XXXX.

oil got so the you've see off we either at lot gas LNG the nature on of oil continue the business, system. see look side, natural now the in now hold a those we're and we you And gas on bit, strong activity gas just and significant of given little our to seeing through And and side. long or cycle but to the pricing big were upstream move a international projects US that starting when delayed,

show that And chemicals so We're two up nature cycle we just it'll component, our combined slowing Europe. our this, going the on a you to years. not I XXXX see I it yes, in feel I continued And, probably the just, right, GDP like three believe security believe cycles, business, the towards are up and industry, of with seven year see if growth, through that's aspect don't at cycle you I late decarbonization general look anywhere yet. don’t our lot run for I typically and that business. see, and to and ESG But our on oriented We in down might with from cycles several to potentially when of we're it, XXXX. upside I of of energy business type years. seeing kind and think, some the again, this Again, that of slowdown have we're the certainly

Mike Halloran

that Well, see margins the thanks and reflective? are profile that's quarter-to-quarter being that being And in we think for point out is margin being more basis? helpful. profile at then normalizing where reflected you backlog the in the backlog the margin on that. That you do not, a the If when was starts reported maybe just

Amy Schwetz

Sure, that I'll at Mike. a stab one, take

point started that We seeing through kind and getting midway only but last margins better. are in improve definitely that actually backlog is some profile at year, of

today of the that that's at we've point are XXXX. that environment cycle So we way projects and projects throughout roll simply more replacement with their system is that strength constructive our aftermarket into helpful. last very current MRO going on would the actually very well. booked that in as I that comment in of referenced low year making is of is in improving And the indicative the off back thing other in through kind of the pricing margins those and terms we're business these year of in those the And large the the the

XXXX actions the had XXXX proactive in take comment pricing we've our of in early finally I hold. some is that that And general, to would just been times into the make last starting extended lead resulted pretty about throughout and even

off through. little really kind that that as been jumping talked view margins not this point, the of bit rate necessarily end get that hurdle as bringing our a a in to this helpful that's goal. there We've get about we And but quicker did XXXX to. terms of wanted We XX% anticipated, so we'd in we

Operator

from next Joe hear Giordano We'll Cowen. from

Joseph Giordano

expect morning. you If were just guys. with next number. of you I Hey, right. Good extrapolate of orders we mentioned year forward, Scott, this is was flat that year, that to a hoping, kind kind which good

into revenues where any uplift next plan because that. what orders let's margin of year next scenario are guiding just a Like are where expect flat on guidance year? in of this say volume? you versus without assume today kind year Just benefit would just like just you you're Let's the given your same, where exiting

Scott Rowe

be X.X will laser focused project is say ready in provide are a though, now not And think higher QX and Amy We're We in for funnel is question, is where saying, I XXXX. are on building I historically MRO really appreciate Look, the that. the a challenged strong, and row. on environment. the just is, where to guidance look today. now a right, QX from though, I'm again, quarters we got book-to-bill stays we've it's build teams it do from delivered two it up where the level, I good say will we if a the and at. really we'll cycle QX what and If we just right.

months, We in bookings when January than have And margin you got drivers, hit on price about now in XXXX. in price think of revenue increases on of cost. five one growth threshold. more project Amy before confidence effective the selective ever a lot right, We've latest XX done of We're X. like, margin then we've terms

get quarter with you pretty significant. accretion that OE new backlog from every works that lot is the its price difference a And MRO way of our so through. And single

So that through. the the comes MRO better is, it higher

I for we're we've margins revenue committed shaping for XXXX. up the on strong and so improvement obviously very And both think to

And but don't the at the of be it continues continues, for sure. same trajectory if pace, better than this to know XXXX, at shaping XXXX improvement if point, I is up

Joseph Giordano

the about suggest Fair industry margins, disciplined. conditions proven just enough. until ask. the need aggressive. that has And the and discipline backlog, commentary think you exists all appreciate I I that to had to I the being be

not, that shouldn't up do kind how, the get project in what you're Like saying happens in things high activity of are if like, practice? decisions place tight chain controls what we're we chasing are wanes, chasing? these and how to going so like So like ensure that be things

Scott Rowe

But get projects and and worried should look involved right and like GMs the on to there. the process amazingly strategically grants Like we can thresholds do got nice we've side got always margin got we'll of of I'm anything big not there's But that whether discipline head pricing good on division Amy work. the strong that of low application had can't take on. ability focused We've that's that. I we're we approval approvals and in great say kind we've large But govern that right our about projects. consider on it. what the take, it's on numbers presidents want to also authority companies, are work We've aftermarket our or some what too and see approve those VP the on we most our Sure. a visibility and what. have so who very

I now undisciplined management backlog. be this and getting at before. really of And the capacity in discussions can than don't we a good so We're team, far more again, see terms And place we ever and we're place our so area. senior a absorption selective at in with our have us that then

are deserve, And with types fit it so making do and our discussions what the really in to commit having manufacturing does the we value VP take, how in sure get right can making those profile our within we the of orders complex salesforce can about those sure we're that products. and and the engineered the the of that we facility, out that we especially want then GMs that to slot

Operator

Andrew Obin Bank of America. from

Sabrina Abrams

have you Obin. Sabrina Andrew Hey, for on Abrams

earlier reaching sounds talked and still have were over gross you drag. guys XX% projects margins So you like it you know the XXXX. I incremental about than competitive that about talking you booked More in

smaller I year. headwind as the you gets move through think that

how So are thinking they XX% in above XQ? about were you considering margins gross

Amy Schwetz

Sure.

occurring were XXXX drags and some that talked in were respect we've chain labor and a gross with supply frictional there margins knew about think to we absorption costs, challenges. lot I So

to pricing, dissipate a were margin sequentially We've about we our through. talked those starting anticipated to really that driver also be to element are and as better all performance. starting think maintenance get fully going way of which to nice made is in we I those that continue

year, to top areas that to really we're that want focus continue which line the the we and where matters. think really ensure leveraging to is ability grow throughout the has in planning I the

that the on revenue converting right to, we're we're our making that want plan. sure at the getting that making we sure product So schedule

if guidance, outperformance the year. big any look at through make we're we a margin not our perspective So you from as way anticipating our

should margins see to we and drop leverage this margins level, we SG&A operating can maintain our start if through to via However, rate. with our better work tax at continued respect

Sabrina Abrams

thank quarter? operations And XQ bit a in little sort And March chain you drove better it the coming what Great, ahead expectations? better? of talk specifically you. Is can in supply of about just getting in

Scott Rowe

definitely was environment general better, The right. Sure.

where the chain so that issues got allowed labor a and issues level. higher our we execute subsiding, at we've general got need environment are us it, are supply in gone, we now the So to logistics facilities the

would say planning. The I is general other thing just

and to combination year I off started a of good the we started just year sure environment, of have necessary and all commitment a focused across the a at enhanced end general on QX better and QX. the just a right going third also to the that and say planning, in quarter much make so operating improved say we we're the back get units. good of starting right QX really strong, about direction the had And ‘XX but the finishing to doing things talking the and

were sure sure to but can do. And a path we between consistent good make of got discussions team more to with to lot a on make and of drive can some continue results, we're the take we that our we're about really our that. excited we definitely able do out that so what to cyclicality quarters We've

Amy Schwetz

way wanting And and Sabrina, that we quarter between in quarter, what performance in bit. into then in in planning overdrive way first work to think just our as we the of the impact. actually, saw same to XXXX. about backlog that ability of margin In drop terms let to the minimize what and do revenue was quarter. a fourth quarter me cycle to productivity to add strong the the I And off that's that and a talked frankly, in have on and quarter minimize where fourth make we XXXX really in the we really through convert it did. the terms to still But we margins backlog through a place that in bring our and

Operator

Instructions] [Operator

We'll move RBC Dray Capital next to Markets. from Deane

Deane Dray

When Do before. impact so margins like wins think color this quarter backlog? these had And does deal deals more just outsized coming into How everyone. start looked mid-size you going some mix, through. implied give margin you us It to the size. around morning, seeing, some on size Good you. better like the I had you be deal Thank tend projects?

Scott Rowe

the attraction go larger bit generally and award, the the speaking, can the generally, Sure. more there of is. but little specifics, I'll then talk into I a to the landscape competitive

margins so as good have And down then And get And kind move that then really into awards we lower on range, million would of you know end certainly be the have equipment, $XX that. highest the typically, this, $X aftermarket in million indeed, that. largest margins. some the business we margins and and to of MRO of obviously, the but our at highest right, the the mix seals

larger And relatively so what saw in few was we projects. QX

to In $X And healthy quicker Those work, margins. million a a of execution $XX the million we and type like. able at lead the this to had fact, in come little frankly, kind higher three kind within on really really quite million which, only easier $XX time million and They're also facilities, time. then lot a we're we to of $XX on mix turn of them less that range. bit side our

the really for the from that high so were bookings and MRO we aftermarket QX good margin And perspective us. Again, projects a mix like.

some So there side, us. exceptions that for well the work on margin are really of projects bigger the

seals look we've also in support, the large little the to valve technology year So the then through it projects. entitlement. knowing the There's that some that we're of is margins we believe specific some and at higher if what of large nuclear these aftermarket what say products to ones, go Those pull some cost providing QX, into really about even and come other end, application, going front I'd a sophisticated for get gotten to we're and on that inflation on we refining the the willing that award. bit those nuclear less have of of stuff, aftermarket us. we've in million a contributes projects aspect the typically bigger long business, call traditionally taken. space booked locked at preserving like always term relative we we the for a aftermarket margins in more are the entitlement margins, last we And big And then $XX we to minimizing other aspect and then are nice just

feel we're But what year good then those and very are QX. and as certainly seen margins a what looking we're the even at we ago about overall, on now, than in forward think better And we what margin, booked we've today. bidding

Deane Dray

a about but additional follow that's what exactly capital you does sales All but for. in just question all supply for we for stretch to really where assuming that healing if talked knows normal you and getting where markets XX%. was forth, optimize And to and able the color. a had chain continued were number looking quite up Amy. What's below target that right, Ever while, working target, And go? so I appreciate haven't

Amy Schwetz

doable. get need a a mid-XXs, business could the bit. we from And it's Deane, Yes, And normalize for to would this it conditions do perspective. incredible be unlock if an think us cash we we to

and also grand That the that allows with complex working about about that one talked we I that mix, maximize working to that mix a make would be in to capital being is helpful difficult As to It accretive be with the standard that things. capital terms Scott tends come in we the us is more tends more to projects. may more way to It really be like. talked scheme manufacturing comment of margins. should

a about different the of right we're lot mix a that like seeing couple reasons. there's to So for now

Deane Dray

was cash this also great free quarter as well. to Yes, flow and that positive see

Scott Rowe

absolutely. Yes,

Operator

Jefferies. Boroditsky We'll move Saree to from

Saree Boroditsky

me fitting in. for Thanks

on end the there's commentary the good, I So to current of great and ship believe implies a is guidance book bookings. roughly lot work market flat.

this you So that what assumption? positive talk is about just commentary, driving all could given

Amy Schwetz

Sure.

So, way with sales. everything for as not XX% of we really going the you in kind as to through make rest to the our year, we're counting full XXXX. XX% guided know, we've obviously suite and perfectly our on our a increase to of sales of guidance respect And guidance

is. the quite and as hedge that strong for a on what margin both that's way you number could I a clearly book our a of on with in mean perspective. But full it think but a improvement be both business a that gone standpoint, have we've I project guidance it So not is the you to over ways share consider achievable what ship, that credibility earnings sales we've to want book ship in from range to is consider could us booking forecast which on seen the guidance prior to allows as we hedge also execution, but years year, from the an our about it to per and create implied significant guidance. deliver

Saree Boroditsky

questions, came a obviously, elevated. just stronger corporate in quarter in modeling the Understood. And margins year despite then being

spending? of was year? that rate higher what the the right corporate run remainder is the of driver for the And So the you. Thank

Amy Schwetz

Sure.

of in legal included $X So remarks, XXXX million. I in put We discrete settlement discrete did had that those were that in that I in it corporate and rate run items of have we would spending, a which at was terms largest for around think that couple my that where that closer our approval of I were corporate spending, to mentioned the numbers. was

Operator

hear from We'll next Nathan Jones Stifel. from

Nathan Jones

commentary utilization? where We've I'd everyone. morning, Can it lot ability you a are comes we follow projects. plenty be you us some some where at lower ability really any just overhead. we can was But overhead a your that. selective over on the the of around maybe on utilization to with lot to here. still like capacity and the with unabsorbed last a selective than that commentary restructuring of and few be more peak. on had projects maybe these to capacity your give prior Good are It's into lot are up of so stuff, talk been of further about quarters unabsorbed commentary about with Revenues

Scott Rowe

I Sure, be the just FX when world the years, into capacity first remember would on we we the prior around revenue to got jump just to comment before the side. compare just

overall, would I'd the on getting seeing to good margins a of absorption. shop. the things more much improve. stable so in in just through is then I environment position And what say reasonably And It continues say we're we're a

going and But we've equipment and pretty got we side. cycle are so of substantially and of facilities through we the velocity times the on now, absorption a the like handful manufacturing better, always where always ability large our aren't which And is the a everything our there's side improves want. to, footprint variances that

allowing directed three dramatically but are when the at. it's to and the things from our manufacturing two that last looking to operational We've margin planning the that side. and what so need more selective, are their are being sites being them, we're I getting selective work about on us to on then seeing process results those selective talk also sales be work years in improved that And the we're

we're globally. And a overall in capacity say good so in position of I'd reasonably terms

certainly However, new that collectively. you sites our directing that. if competitive across on some of is look there's disciplined valve And the then seeing and or the two orders the still the I'd the to, work lot one a more up a working lot we're of and need well, the we're we say to thing are seeing peers just now side, we're landscape, becoming as pump well on starting and side even fill to other

ago And really for couple than we got them run the so we've next the I two years getting And quarters I locations say feel than like to ago. of year on here able we're in and bookings, healthier getting into right be deserve. selective would certainly a good a of margins the and being in position a terms far

Nathan Jones

bid improved in coincided capacity year as the to continued improve to continue Historically on the up competitors and well for Do margins yourself as over see improved starting guess so? has I pricing? to or industry expect fill you projects next with Flowserve the pricing. for

Scott Rowe

some book and Nathan, happen, of really I to it we had doing right. we've peers some projects are, seen, think right. What has the Yes, we even quarter, this thing they're same our big

compare projects a move backlog our these years years fully think level. ago. No last the we're larger up to if higher capacity projects year, on take work But did Again, at we two our did at we And to certainly I these to situation, margins going with we not priced that way. ago. and we get from expect so substantially pricing, were even where I two

Operator

additional participation. callers today's teleconference. that no We all With your thank in will you for conclude the queue,

You disconnect. may now

Flowserve (FLS) 2 May 232023 Q1 Earnings call transcript