FLS - Earnings call transcript Q2 2024

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Operator

Good day, and welcome to the Second Quarter 2024 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, Treasurer and Investor Relations. Please go ahead.

John Roueche

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

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

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

an As and being a be will is event replay reminder, available. this webcast audio

information both review as our These in and Please available which they expectations release control. measures section. encourage our and non-GAAP call will, note include website forecasts, of as are and to of press that our company's both management of and Investors earnings the involve upon our forward-looking to earnings are statements harbor results, statements. disclosures July materials and measures and based on do, our the beyond the other uncertainties, you and are of this reconciliation XXXX, in as which are accessible well to contain included non-GAAP XX, We many presentation, reported safe risks our

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

Robert Rowe

and good strong with by We margins earnings to growth revenue adjusted increased and adjusted and delivered morning, another with gross results quarter driven to XX.X% quarter per operating our share. outstanding increasing some year-over-year of improvements the more Compared while include: highlights everyone. sequential execution. and second Jay, year, Thanks, than last XX% over XX.X%, X%

With to our over of customers billion, associates X.XXx strong growth. a I delivering to thank our of year these the and results. supporting quarter for sequential XX% book-to-bill dedication represents positioning further of world increase almost in XX%. last billion in for the quarter, company $X.X passion and their $XX our impressive backlog the sequentially the to Our around million want versus growth in grew bookings $X.XX a

commentary. quarter with Continuing second

sequential a $X.XX $X.XX, per adjusted earnings was increase year-over-year. and of Our representing share $X.XX

bookings awards XXX included revenue since highest margin at We points operating MRO XXXX XXX of mix adjusted and project ongoing and are versus in with prior in $X.XX respectively, year, activity. our the the by gives which our increased both and progression and Our gross billion over aftermarket further margins level journey. basis strength generated confidence a us healthy and in

implement pleased our we with We and for have couple and last growth opportunities on very progress improvement. the further are we made the and results of years, in capitalize as

progress our Our new operational us excellence significant within program much higher The improved discipline manufacturing process organizational at with design, facilities. combined to continues results with level. allowing to deliver operate a is

we to continue are is While the journey. drive further are results operations recent upside that maturity impressive, there as our in confident we

this program year. product earlier launched Additionally, excellence formal we our

end We have third X launch deliver margins product undergone business business a the and unit our our X month to identified program second an plan without the units of within year. portfolio and opportunities unit next of have focus to higher review growth. extensive business our We before on with this compromising significant

back from and have an by program As half product discussed The XXX to of and year, results progress incremental at XXXX. see points XXXX effort last XXXX. early to this the excellence in improvement our begin of we is basis Analyst from expect margin Day committed encouraging, to to XXX we the

across components business and Flowserve. the financial was excellence of new performance process Operational system to and are product that improved deliver created essential consistency Flowserve

turn markets. now our me to in Let bookings end

Our bookings second marks over billion bookings $X of with our quarter $X.XX quarter consecutive billion. tenth

strategic this approach. reaffirming our our total of again quarter, XX% over represents strategy growth XD Our bookings

the activities representing of each aftermarket the Our and about equipment second half bookings with total. were in quarter balanced original

including the announced East, from benefited we large in totaled the $XXX Together, these April. X projects X equipment, awards million. original we For large Middle approximately in

record led utilization operations asset bookings spring our quarterly at than and elevated season customers' turnaround The rates of aftermarket million. more to $XXX

million consecutive addition, have turn, the level, service vast showing margin, In above $XXX levels and capture delivered higher high produce Flowserve's service and continue faster presence, aftermarket on resilience of the customer we of this now parts, X local repair solid quarters work. relationships to our entitlement. strong rates

positioned chemical We will expect levels facilities high future, business the world's the is power their and our for for foreseeable continued need utilization at well existing remain to aftermarket service and X about operability. generated quarter. By level we our gas of growth, year-over-year and this X market, includes of large the highest projects end XX% of oil dollar received a increase and refining, representing

capture to this biofuel decarbonization Energy program. bookings capture, substantial in of end carbon activities market, continue are conversion, also number in primarily our as Advantage and such LNG that XD We a recorded

project in also announced quarter, growth represented Emerald the XX% in driven which Arabia, significant $XXX within We growth was demonstrated chemicals versus market year petrochemical April. the by the this was This Saudi million. booking and greenfield prior

We continue overall in additions the in East chemical and improvement chemical modest to significant Middle expect demand. capacity global

the all and into making to flow new RedRaven and are petrochemical in aspects progress adding chemical We good specialty XD decarbonizing chemicals both facilities diversifying also existing existing and strategy plants. of with plastic control recycling, products

the for center expectation intelligence artificial generation, Last data fueled quarter, power I ever-increasing in in capacity, by highlighted growth increases by activity. the driven

which million, XX% Second year-over-year. represents increase $XXX were quarter bookings power a

strength this Additionally, bookings. activity quarter particular with saw more than $XX in nuclear million

the new in in be to life nuclear -- extensions generation for cycle projects optimistic of continue parts light We about various growth world. power

Another we are is seeing industry. encouraging end market the signals mining

and transmission, in roughly needed expected our a increase efforts larger stable sector. long-term for Currently, to a to and development. earth efforts million market of product general further activity. $XXX capture and bookings channels in to our of plan more through amount organic growth We industries electrical energy mining enhanced this products in growth included see portion new in rare to year mining are As minerals this mine and we other storage grid hardening, are batteries, our

our shareholders, diversifying to value of stated and evaluate we interest be one products as Additionally, mining would exposure our of portfolio to and offering existing fortify area services. our our inorganic further opportunities help goal create for achieve of

now Turning saw large East in and X We bookings the on Europe Pacific as growth declined the modest slightly strong quarter the the to Americas. Middle bookings well in growth Asia by projects back as region. of year-over-year. second

Our Middle overall into opportunities parts reflecting project of the visibility funnel and up the X% the year-over-year, in other continued is significant world. project East

expect aftermarket MRO to short-cycle traditional quite and this and continued Our of see durable, the we side proven on growth has business business.

full result, a we for As the believe control macro favorable environment and outlook space. remains the

transition global to and regionalization security to electrification to significant further energy megatrends positive current We energy Flowserve driven and and and these signals see decarbonization megatrends the continue by on Combined, trends growth. is potential these positioned capitalize to drive attracting digitization. investments. well are key from and

growth. to In $XX us revenue the grew second billion, for by sequentially quarter, continued million $X.X we positioning over our backlog

We nearly expect year-over-year. first $X.XX, our year for guidance increase year solid year will time of Combining half with increased in year continued a a book-to-bill $X.XX exceed the performance are X.XXx. full start second a which of we we XXXX to the for at of EPS to represents range with ratio have book-to-bill improvement, XX% this first midpoint X.X, the the the and the adjusted to our to full half year expectations ratio good off for our

at on are way that year's progress communicated and We are XXXX achieving financial we to our at investor Flowserve, we the significant we last event. well making targets believe

now detail. turn address I Amy? our Amy to will in results the over greater call to second quarter

Amy Schwetz

Thanks, good morning, Scott, everyone. and

margins, We generated detail. more in share year. results billion, financial adjusted XX% delivered $X.X versus of nearly sales, another a with our improved at combined $X.XX, Looking increase of per strong earnings quarter last which

execution, instrumental efforts driving line in to want growth their and Scott the both were echo associates top for which I thanking our during quarter. in continued and bottom

excellent operational team improvement focused adjusted support cost ongoing XXX end our margins with improvement and by which Our of margin respectively. represented of led operating our from basis XX.X%, revenue our and and bookings Coupled customers food XXX year-over-year aftermarket asset to $XXX robust we discipline, quarterly million. utilization and of efforts sequential conversion, strong record sales markets, points, of initiatives generated

business. $X.XX our was serves expense, of adjusted the and transaction overall adjusted to the was With intend the noncash business, or how and share our charge divestiture valve we dilutive of and with drive The reported end of breakeven NAF it's net optimizing $XX was item improvement proactively taking of margin The $X.XX. and paper one to portfolio and business from we it example to indicative total control divestiture the per realignment is pulp which cyclical action annual business further principally the million items, related had to the our AB just earnings are adjusted best. primarily largely and modest amount. at revenues across was NAF was products The respect how half by largest markets This market. over

On share. first through context for increase the phasing mid half of we opportunities the year's of of the stronger a adjusted the increasing expect guidance range still earnings strength delivered see the to the EPS. To to provide the this adjusted half we narrowing year, $X.XX of adjusted results, of to combined a $X.XX we full year At year, to $X.XX our guidance ahead XX% are our compared XX. we compared point, balance last second year of the rest for EPS represent and to with per June this new would

in Over to steps less we the differentiation And years. of smooth looking quarterly XXXX do have the seasonality taken quarters, several in than past ahead, past business. highlighted we expect our

our tougher year-over-year rates half we from in guidance, calculate encounter to comps. full moderate as year revenue our the do can you As second expect growth we

should typically quarter look EPS, the while will solid second don't performance. say that quantitative similar I very Additionally, third provide we operationally to our quarter

be liabilities. certain third recognized not results Our annual could the incurred true-up impacted by quarter but of

EPS. purchase week will the to are NexGen expenses related M&A, and akin announced the We exclude adjusted to we considering QX from be last

expect continue best We to be quarter. fourth our performing quarter our to

in to now greater the quarter me turn Let detail. second

increase Latin revenue X% Middle improvement respectively. of by and aftermarket percentage improvements Africa FCD's Europe All also XX%, to X%, regions XX% line original contributed equipment respectively. and East respectively. both growth X%, and Our and America, rates the of our notable with FPD's in the top of also X% and increase of and with driven year-over-year comprised year-over-year X%, revenue activities, and was X% increases The was

Shifting year-over-year XX margins basis basis representing to gross XX.X%, sequentially. adjusted of a points point XXX margins. We generated and increase

operational improvement driven mentioned, Scott excellence was As our top program, our by and execution solid largely leverage. line

expect in margins will our further efforts with combination XXXX progress expand management level. target towards as even this, our product We we

adjusted their margin especially X% considering original XXX margin generally encouraging, XX.X%, This is a improvement revenue. By XXX adjusted FCD XX.X% points. also of basis was improved lower-margin of a segment, basis progress gross in FPD's gross improvement. year-over-year nearly point increase to sequential a equipment

For the first the was of impacted mix. half gross margin by year, product FCD's

believe quarter-over-quarter So we the mix at improve We second to the pleased facilities. year the demand in improvement. are product due FCD's effective substantially will improved margins half to see more planning of and

quarter XXX despite margins gross cost On of increased increasing items a prior adjusted second consolidated basis, $X.X by within versus to net billion points XX.X%, by reported basis year. sales

Despite to to growth quarter discipline by of dollar top XX our million. actions. and Second $XXX quarter during points cost modestly a ongoing XX.X% SG&A basis percent as adjusted was line year-over-year increase, sales SG&A increased the $XX up million driven solid this

of of million, XX adjusted reported level a a versus about comparable SG&A by items. increased actually sales, $X to decreased SG&A basis, by the points quarter period. primarily On lower XX.X% second At due

was operating nearly adjusted the $XX in year-over-year. $XXX income Our of increase million, an quarter million

exceeding expansion year-over-year. delivered operating point basis XX.X% Our XX% robust exceptional a was margin margin an incremental and XXX adjusted of

with in earlier discrete improvements the story, a taking, indicated XXXX combined to by we're from year, our operating leverage. expect performance actions model we As driven be new we our margin-first and revenue

continue we target XX%. positioned achieve will to XXXX well adjusted be as we XX% our that of margin operating perform, expect to We to

margin was year-over-year and a basis. segment, improvement, up to increased on FPD operating XX.X%, basis delivered points its also basis and points respectively. sequential By XXX a a XX.X%, representing of operating which XXX very FCD sequential margin adjusted strong XXX adjusted

result We continued also a operating margin as see from higher FCD of margins of expect efficiencies. year, gross the during second operational expansion to adjusted half in the primarily

despite driven to On million operating a items. by points second basis quarter reported adjusted increased margins margins our XXX realized increase higher and XX.X%, basis, year-over-year $X in leverage the operating

were approximately respectively. Our second quarter adjusted rates and tax XX.X%, reported and XX.X%

ago around when the This XX%, valuation jurisdictions. tax quarter's benefit. than year associated higher considering reported elevated of in of We expect discrete loss XXXX year adjusted we a of sale the on rate and tax rate now release NAF full was saw tax no the certain allowances

was consecutive the and quarters After in cash requirements, Turning second capital cash operations, $XX cash use accounts by generation million, from primarily operating flow. liabilities. to of working quarter of consistent driven now X receivable accrued an

Our over $XX of of timing receivables inventory, result as strong million an reduction offset a revenue this contract by in which including net was assets. the performance, increased quarter's partially sequential

Additionally, as accrued account. performance-based and compensation in we the liabilities line practice, incentive expected paid previous impacting quarter XXXX our with this

line As a accounts. a as basis, we working quarter percent On points basis capital adjusted increase and the become points outpaced adjusted basis the of a second more modest X% XX our growth our decreased sales, XXX to ratio X% primary efficient capital saw top working year-over-year, increased in by this primary XX.X%. sequential

accelerate. our we year, the cash For generated the from operations to of remainder expect

anticipate conversion our free more the full XX% around we of or generation flow net cash to rate adjusted year. income As for such,

common uses of $XX cash capital Through first share expenditures the repurchases. we quarter XXX,XXX announced for dividends in of repurchased a million to included during little over shareholders half fall. the year, capital of returning commitments reduction in addition stock execute to dividends, we about for loan term we last million Other shares $XX our $XX allocation and and a million the as our

LNG last strategy. will referenced of This pump announced allocation acquisition in-process our earlier, approach. capital exemplifies which our I believe week, we As further transaction the we accelerate XD technology,

drive targets is enhance long-term remain Our XD robust, that we our pipeline strategy. interested inorganic and returns and will in

our with believe direct us the we to highest disciplined investment to return framework and for will returns and our allocation, dollars remain long-term guide capital will We shareholders. our our

and expand of earnings half of rest the the year, summary, proud quarter In year. the and through while of to are margins we opportunities this we the first continue to results we delivered the during see

achieve our our confident remain goals. and also XXXX in to progress We ability

call now me to Let return Scott. the

Robert Rowe

an Great. of XXXX, across were We orders our Thank acquired the hydrogen our would we In Amy. are technology. distribution end able you, update activities for I and Industries' on pumping that support to last quarter and the pumps. in-process markets ongoing to technology now provide LNG strategy. growth third R&D year, now like decarbonization the we hydrogen commercialize the Chart receiving

Our technology reliable and safe hydrogen fueling. enables

the XX excited expansion we fueling United In opportunity quarter, the greenfield new million construction to the the second this stations $X.X booked States. of the of related to We're in about source. support

technology we cryogenic can applications. Additionally, for developed fueling that we used be the believe hydrogen in gas other

differentiated pumps Last week, fills significant Flowserve valve we the liquid company liquefaction sits start-up but from our with pump, and announced the we a Cryogenic which processes. cryogenic the purchase portfolio, regasification a this gap offering were mechanical Solutions. acquisition the at NexGen of in in-process across R&D natural pump for space. has called LNG seal and missing submerged difficult for heart from cryogenic a NexGen of technology This technically in submerged gas presence

of We these pumps excited with variation capture our first We pump remain and a expect we we comprehensive XXXX. in believe expect suite of of we the the products. bookings of to the and LNG, growth will market generate fully additional in share commercialize year, more to about second half

XD enhanced In strategy, summary, acquisitions built progress continue enhance part and Diversification focus, competence an growth expertise. channel our important product great product also small of to we made strategy our and portfolio domain have flow drive and to the on remains technology control through development. new we through that improved

the portfolio markets apply diversified again profile. an our above-average growth quarter, Our into continue end sequentially grew that and we second bookings in present to

feedstock of supply of a a chemical This safety, recycling Germany. we waste to valves company in and industries. other quarter, and into commercial-scale for the a tons food diverse new convert facility contract awarded polymers XX,XXX molecular in as global care new facility health During pumps over from major the will construction were annually plastic into use

services to customers. offering the our ensuring provide Lastly, RedRaven but in these to and we positions analytics, possible and on IoT also best are solutions for customers position Flowserve through provide predictive that to instrument ability digitize, our for products our aftermarket with monitoring true solutions our

In the save of quarter, by RedRaven second dollars production minimizing one our of millions customers downtime. helped

analytics process notified operating the their condition vacuum operating our in dry to predictive and Our unstable promptly advise an modify system customer parameters. them of

unplanned optimization. to the we and drive our available customers to were significant and estimated that RedRaven would shipped The to solutions of a compatible. Examples flow an As demonstrate result, able increasingly of avoid Flowserve day vacuum downtime possibility dry the digital our this in have help ready cost lost million per value revenue. loop $X pump is capabilities like be offering providing now

In is operating well positioned to which increase supports of another guidance. year strong our full XXXX year financial for conclusion, EPS performance, second Flowserve and adjusted our

backdrop the are in and served confident approach. under large macro as well of run our our to in business ability our We as bidding industries both disciplined the capture project orders rate

are well, opportunities ahead by of are the We and us. executing we excited

deliver confident at versus product program. our primarily full margin points least year, operational efforts ability in early year are We operating to XXX well our basis excellence as from our through in XXXX excellence prior as the benefits the improvement of

our Analyst year. ahead long-term Day Lastly, communicated believe journey our we September last are goals that the we on at to we

with upon focus and near-term build drivers and deliver on growth operational to to strategy that our continue our initiatives. product further XD committed is to Our catalyze today. operational excellence exist our macro margins We momentum to the and enhance remain

growth will the customers, our deliver of about and associates capitalizing to We today the in shareholders. the optimistic with remain our outlook. pleased our and market our the in further in committed progress half long-term the build our future and upon to opportunities that creation success value on the into our increasingly first We for are are year, ability confident

concludes our now Operator, we to remarks, prepared the call open to questions. this would like and

Operator

Baird. And Instructions] Mike to Halloran [Operator we'll go with

Michael Halloran

Let of me it second for here talk through year just and the the what means process year. in the thought half next

or you've some these Could It and there? between variables a of margins to So that half, the that conservatism is moves. talking little how I understand certainly relative back like there's give been the moving want talk feels seasonality in margin I level in OE to around is more bit about other history. mix then but about the embedded some specifically, understanding the you the to hit might few comments some And more make how sure context any that? quarters last more the aftermarket just

Robert Rowe

then Sure. let and comments. add few Amy start I'll ahead, I'll Go probably a Amy.

Amy Schwetz

I'll with really about we with And this year revenue. are was knew than coming rather as outsized into start margin Sure. strong I We revenue growth. off to year we've think be growth. revenue expansion a a entered XXXX, that going

out seeing you're play in so And that XXXX.

and we'll the first supporting comps, up I second the really that The nice half and year. revenue see quarter say, against of would moderate growth, are easier in back

large how think into As out be that QX to we about are a we story plays going XXXX really booked XXXX. a versus this XXXX, in revenue projects these

that growth think into we those us are XXXX. moderating, building of positions And although rates we backlog see going so we that well type the

in just the messaging overall I'll half of and really leaning into growth push comment is internal the then And around year. the second that

we've bookings quarter above $XXX around in coming aftermarket those So the our done, million. do through you in at continuing to the that second of pieces higher-margin the level business, and particularly see what

it had special the margin we've on There From Mike, which we're half second half well-executed really nothing year. there, the -- the an from a FPD, outstanding I'll through of And the moved really we in first a a specifically with was expansion or how quarter margin comment thought quarter. was pleased of but perspective. expansion perspective,

drive towards higher then And the projects project ability shifting bit for that saw favorably we on with revenue slightly based a those expected the slightly we mix actually of strength us So see. we than aftermarket revenue to bookings. our shifted higher-margin

new that the low margins I think you as So margin XX.X% normal, as operating the want call see watermark. will although I definitely don't to QX

a half And the at operating of that continue to deliver FPD. the the into so margins the or year I and of in excellence XX.X% we growing rest that better expect sort business lean the of within as really back for profitable of operational would year pieces we'll

of perspective, execution. began. and type for That slightly and FCD driven the by performed would driven bit more an solutions anticipated year. in than driven see we quarter partially work, in quarter sort more we was It services second little That's revenue work. with control a by a From was thought in the further we mix and automation we than more this part in the year the operational that favorable back we'd still we of when in half than we project expected said, part and better of expansion mix margin valve type less room by

more see But back the the year. by through importantly, we half coming of in operational efficiencies

saw margins to in progressing was So or opportunity, the basis are bottom very quarter strong, this by line more nicely. we've grow The operating points XX.X% this as year margins we XXXX. see we that indicated, but XXX

Robert Rowe

thing only we've QX The variability in maybe including to quarter I'll year. X the come the that strong minimize year, add worked last really hard would really out this of first we've QX. the years, then the between be and And

the will be variability much that QX still year for be between and will to still gap. the be continue lowest us. out. quarters And so play we'll the will of those that smaller, The close But to work QX the will seasonality highest.

Michael Halloran

appreciate that. Really Great.

color more capital seeing so little maybe laid So related early how second what what a at be and the on launch, Day? of broadening One, a the and of the just couple could time product opportunity out feedback embedded question, Scott, was line in And you or a you look two, formal bit I that color, your more you're and magnitude the might launched of about know out. like review one, prioritize But you're that. were that you a more on to internally? talking Analyst little questions it only expectations

Robert Rowe

absolutely. Yes,

kind see where of start X operational we the levers. in just XXX improvement big basis XXX and laid was year, I'll out committed incredibly One to that points margin product was of to One And to and And there. And so was on improvement. we management we also and gone Analyst excellence, We're portfolio one X excellence, optimization. this points to committed operational well. we That's categories. at further we continue XXX talked excellence. XXX the the seeing to product basis Day, growth upside excellence, within then product results about

we year, so of to say, at with And last I our reorganization, did beginning when recommitted, the we dedicated year, a product will the really driving product excellence organization. management

essentially And fashion really review capability robust our to this in portfolios of a product more business the product each families so that unlock much and X within units.

in exercise the of at so the is the product really the beginning first we year off that on And this optimization. unit business kicked

so do families and actions a a raise margin decisive the SKU things then to understanding to we standpoint business prices standpoint, maximize unit, and move the product out, And need like what families. we taking from those generate ability that do within different customer to invest within a looking products, products product in all standpoint, the at really value a either to product and

can kind visibility to is business flight to the We've we focus move believe for drive and what the about first about margins months. continuing got the I'm up excited to in while really so margin And has unit been we improvement and X X actions growth. now on clear of

this margins substantially. with but And program, drive so we up we growth think compromise don't

year. the that all by We've we've We'll month analysis. of in unit the done business got in next business we've starting action end already flight. the of third the going business launch unit unit. so develop plan. We'll of terms second And flight to that in And launch then X got the data

excellence. committed excellence haven't to really still So and of the the product that seen points benefit XXX XXX would in product summary, from I basis we're year-to-date. we say excited And We're about initiative.

And more show end will predominantly as ultimately, so at XXXX. continue XXXX the up well. year, of into to that that but starts And into then this

Operator

Cowen. Giordano Please ahead. to move And [Operator go TD Joe Instructions] next we'll with

Joseph Giordano

talk you XQ, like point your XQ jumping margins Can the from quarter. the where right? about be off So would best of

about talked You compressing this.

how It's just this to thoughts but you as new people like as like been 'XX? a we and this -- early kind big from to here?. like want it So pretty set year. see less, It's margin early expectations bring that do each jump for I down getting appropriately compared for on of

Amy Schwetz

Yes.

moving we to as XXXX, think, on of finishing that focused years. So the kind we've going and look the at X been into we're I up XXXX on be Joe, things last focused

I think So between revenue. QX rate year. and perspective that we've an really issue, That that minimizing in using that and performance coming as business solved seasonality drive a to from exit that's differential to OI really QX said, particularly don't that fully looking the grow

But as an phasing look the capital And do think helps with. as of on move to helps certainly way earnings journey earnings, see we manage projects, we first I us we'll the and which on the focus to So quarter revenue that lightest of continue steady in larger the at we'll forward. that but of a also continue revenue that revenue these year. of really we how maximizes we more working line levels are well, top from some as perspective, a both our

Robert Rowe

to So I will this targets add, Analyst for at XXXX just we're on Day. the we last year progression out the laid

We great year. everything made the we're to geared so XX%. XX% is progress And this to driving doing towards

these will achieving first so see targets. another And should substantial I'd step year year, come say, next slightly, quarter we down toward full the while

Amy Schwetz

Yes, absolutely.

in an to of map really XXXX out excellence, and the in, really, but we at a the work on even it that kind we're of road gross how done in we've and terms margin us work, kicking opportunity of laid product get seeing margins operational long-term where continued with our providing to target. see Scott's think level, like I excellence, lot we expand with us feel and closer

Joseph Giordano

point? to quarter. that your of analyzed was you more the much Like like see portfolio like this in that? Are lens do opportunities of the interesting feel And like targeted sort how then stuff at divestment there you've it with there for

Amy Schwetz

to to look continue going that. We're through

right going to And that do to and some for We're that continue allowed although Scott easier to better for relatively help us both easy to and continue this. continue us look buyer we to opportunities, call for portfolio to be earnings, others it that a is call. this data to it us bit the us was management get the one we referenced found was This to footprint, that those analysis It a probably optimization. dilutive at might it was product than was our make was easy as little reduce going of to was something once make.

Operator

And question Kaplowitz Instructions] our next from [Operator Citigroup. Andy with we'll take

Andrew Kaplowitz

bookings Scott, pipeline the up so you Flowserve is for I think. X%, mentioned

So pipeline. elaborate you X what quarters you addition still year? on you booked that in there large in to this the And quarter? you think over or at then over projects book-to-bill Do least other average maybe still can few out half do of second could last the see next

Robert Rowe

we really Yes. the the prepared X% greater million. project say us of when the is In And really up about visibility year-over-year, project Sure. to work. $X projects remarks, funnel, talk did kind giving good it funnel we project is than

I very funnel. $XXX projects. there. QX large another And that had We near-term near in larger talking kind large the incredibly type obviously don't in was mark X see so we're good. of really about the million projects

primarily million. But we've see opportunities, we to opportunities, call East. just $XX-plus kind of $XX million Middle we have of where let's a got long And those it, list

And a still like work and Oman, in of of Qatar. Saudi, there in then Middle so East, and downstream substantial got visibility activities petrochemical. we've out in We've that UAE, got refining processing to so lot there's Kuwait and there's build further some activity the gas a

is there so outlook incredibly positive. And our

On year forward side, our That's X XX%. look saw up the out. power funnel on we the

activity we've And visibility in around is that so build-out of very America well. to and a North lot strong of as And nuclear. nuclear got parts Europe

so about the excited power And we're pretty outlook.

within the see kind while then that is funnel. funnel, super and end greater energy XX% energy of for And the transition And transition large the transition and up robust activity $XX new energy than energy fastest-growing kind we size the projects very of on of million, in year-over-year do us it's aren't project market.

average million. and between And of so $X that the million $XX be size would anywhere

believe We've implies the outlook long well. greater that that short, kind following, X XXXX than of and the second the is given feel end good at which of we're the full of well. And XXXX a project half some year, is year the our I up. as pretty the as story about visibility. mega in but into think So got year we good certainly, book-to-bill funnel over X, trends the visibility through We of

Andrew Kaplowitz

sort week either in in form second the more immediate think the you of can acquisition pump new $X.XX about on to that that the talked LNG, least 'XX returns? take release, last How And Scott. from you're return talk helpful, Very that made you cryo that see the in you an at here about LNG, you expect investment you then in half should you of in we return the do the 'XX. do that wins going significant potentially about -- or versus how

Robert Rowe

we LNG, at all kind the talk truly and we the can Yes. I'll the the LNG And to And were pump, seat LNG missing side. row for can liquefaction that what get away get and side then -- from the heart of our and projects of cryogenic against the very what anytime we a of talk offering, process acquisitions not within sealing at is allocation this excited portfolio going of and front all regasification soon. on with was we're we things outlook a about and there other about the activity. kind look when both It's fuel. of maybe pumps, as we valves aftermarket some profile capital the submersible our returns Amy of standpoint. the and it But transition about we our provide mechanical the looked side,

R&D So or this license we side to and product the the on technology been do. kind path for something that's what in-process was at It's creative of been cryogenic wanted acquire Flowserve. to And is a found that the the we something pump. years development of

end of year. into got a next path we've year. doing the so before testing and But to prototypes do and further through commercialize to And the the the beginning got end development of we've year some product product work clear those the to

but new at cryogenic equipment, be pumps is million of also of a $XXX We kind can think existing our submersible facilities. into year least pump retrofitted

the existing our we opportunity have -- we that to put we're actually so didn't product. excited we pump because were into really that And applications didn't in about not participate

And we're this so this and the see excited about $XX revenue, but growth is XXXX easily of something that maybe and next year, certainly into a product. of of we can million a XXXX kind not year

Amy Schwetz

standpoint, from sort this just a look would lens would likely through And any inorganic of growth. of at the we return

to outlined, which something does would comment it Scott's I commercialize, that margins? that the on -- -- higher have may commercialization would risk period. like it accretive terms And actually are strategy, be? the to slightly clearly we than that We this long-term The is believe returns expect make need an returns business we So well, would we expect one there. we will then would fit less it of is in that existing

in the are a And we acquisition really the commercialization. we're out that of sort forward in to limits that this about So actually there. terms of the risk excited in going way finish returns of are this instance, potential able

we're something So excited about. very

included believe an in of into economics which help last facilities, And it what ability pull-through we've that this provide the is like Flowserve products may the a for to we would comment transaction benefit, term. I added us this the make product of is then lead longer is LNG not other

Operator

Deane next go to RBC Capital with Dray line of We'll the Markets.

Deane Dray

your hearing in the on the interested orders the always take composition I'm Scott, of quarter. in

give order also aftermarket, the your And book, some your terms looking what's Or highlighted are ones. access just color and those the that through? record extra what something terms X size then getting aftermarket take the that of that installed deeper large You in base on of in can to orders? coming means? the is into doing you But you

Robert Rowe

quite was talk the with and Sure. about projects, then a I'll I'll and market start frankly, after highlight. aftermarket

that. time little spend I'll a on more So

the X large mostly project we East, a we've got those. X in side, had On around the strong of but incredibly the orders, Middle roughly again, gas award. They're also all chemical in East. And connections $XXX processing Middle million across

in a job and East, presence valves pumps, team and seals amazing the the with the doing have there. good users Middle an make then we've with ability strong We a end got to that's

East, beyond business $XX on million outlook We drive We've had awards visibility get in We got confident nuclear power Middle had continued X have projects we're and and we of that those $X plus to When a continue list type the project awards, to of did of the side. range. bookings, forward. to significant the $XX in to kind our lot million transition long million ability energy in a work. you

so And industries balance nice a within across bookings. the project really

the quarter in million to of But That's We had. $XXX ever bookings aftermarket. now highest work. the turn let quarter. we've me It's seventh of aftermarket million level over $XXX booked the consecutive

through demand coming on if there's parts drivers chemical And I'd at deferred side. There's One, service our petrochemical it's system. also plants, all big power driving just on pent-up the installed some just Clearly, but across say the where some side. I is, still base utilizations running is don't facilities, know which high that's COVID utilization reasonably X here. market refining maintenance levels, our side, and so high plants, the facilities, --

helping that's as us well. so And

we in division I'd in services was and really the back a BU on and -- our our big us But of for ore business. last is segmented within Pumps separate new say the design the second valve solutions clearly driver segmented we year, where

this our up so to by rate focus our on enhanced our we've base. And capture installed ability move is seen what

And in lead mantra, so through business. frankly, is shorter in around being our quite providing responsive quoting speed quicker, wins the more general, deliberate aftermarket actions times,

aftermarket the continue And seeing our rates so capture to is what we're move business. up within

record QX. move this can look we we that believe continue at But $XXX obviously, we million bookings to forward, if so And up. in

Our for believe side our continue to of all in to capture we speed continue business. We aftermarket business. the improvement aspects opportunity aftermarket the can still side of we drive rates have as grow of that this

to of teams excited can continue valves we're so drive pumps, some that And done. is, of this a perspective is and we and growth and aftermarket more we business. frankly, global org have provided to about the lead across the unlocked The within both quite enhanced initiatives design believe what capability new

Deane Dray

That's times. fabulous. what the drivers nuclear a up in exactly And around capture looking of That's was handful of second for then what come has I the rate. question, terms was

a for we're Is an as of opportunities? that related there investment side? That's about centers. plant. your as -- And modular the opportunities talked Anything and you've some data on small a nuclear America. and North so anything lot more that activity making You in needs Amazon seen Europe power reactor are hearing far in opportunity an to what

Robert Rowe

general, small power I'll start I'll nuclear. and or end I'll with Sure. SMRs to module reactors. go

seeing what for we at committed of there AI. trends Day, work see on put outlook new of We'll we there. on what is data Analyst kind power missed the some were because the and pretty year us we center that X.X% Clearly, forward X.X%, the rate -- understated out and some is. So look. laughing growth last at about We on I'm was to feel good we we're committed Jay. to our

us whether nuclear, year. coal-fired gas, $XXX-plus of whether else. it's pretty all We're natural in for much a million it's applications, a the But power power is plants, business power everything

seeing, driven being new decades the base. and being substantial next growth on of of the of massive after we're reasonably the the on now back is everything power installed And across Americas parts this we years demand an But center demand growth call, back and of have relatively in and Ultimately, to kind power world. the artificial couple believe inflection data what that Europe. stable, driven of of intelligence. a see electrified in I'll demand, increased we So we other over is what both that

for start the or rates -- we're substantial we in so Europe in India outlook And other capability parts the we and parts seeing the of facilities, build-out plans and We're see expansions existing then as to And power also is U.S. substantial. within and other of well. that feel generation utilization see well, seeing power increases Asia Pacific We across increase. generation

that seals valves what and of we and products pumps, supports across lineup power. a nuclear. And can traditional good so got power pretty in do we're We've excited about

regardless lot the moving French side, into any believe relations We've an and on both has is they're pretty of the pumps and seeing Europe, this the their Then we're authority and pulling nuclear expansions expansions. our provide excited into plans we're go that as got incredibly in them forward condition. with a applications well. India of about nuclear safe And Europe, is and in to clean What that on our on and of the reliable for nuclear fuel we product portfolio. EDF, they back different license primarily their area strong as valve

extensions the seeing is And certainly in nuclear then also Europe in life assets. we're existing on Americas, what and

taking to equipment our valves pumps extension working that existing effort facility to our life so and lot equipment make full side rerate a life extension that XX- XX-year they're when asset it's adding sure that the for the a of and of is they've and that on or defined. substantial of life a aftermarket replace do to And they existing the nuclear that, and the

significant as growth nuclear substantial go The our happen funnel forward power as in we year-on-year. seeing forward. overall, generation XX% will are signs fast, overall is now grow. so And up we something to that see doesn't It funnel we but continue of

funnel at Our of kind is percent that XX-plus year. right a nuclear

as we And to go come so think I us can for about you forward. nuclear expect quarters to talk many

And small with modular then question on the reactors. last

We is R&D product, part away support my SMRs, the years several to still becomes that's or but that a development of to until business. in technology our kind meaningful get view of and commercialized are many the participating the of a we

that And technology. we them, that's commercialized. advantaged doing by our line, I'm spec optimistic into valves very XX and probably not their years again, X to until But the select with time are kind So we'll process. on of out we're still working in hopes we're working with players their an with position that we're few is what believe our a pumps get it's

Amy Schwetz

is into just I'll is add that that the comment One hype happening.

So we've the the in of year-over-year. XX% a seen increase first half year, power bookings

So it really trend see the out first in the we not a in this of year. the future, just playing started is half that

Operator

We Karas next line to Damian the with of go UBS.

Damian Karas

I'm from call. another late on hopping

didn't but it, on touched you if I apologies, hear So anything about price.

date? seeing? are you the the realizing are bookings, How I wondering that give you from if order value some some kind -- perspective of environment incremental of the kind seeing could us much pricing normalized? mostly that maybe is on pricing? funnel, And in just you of So was the value-added to terms you're Or still

Robert Rowe

doing X Sure. gate. hasn't I'd a years, the a But been of the much happy in in much first better say we're I'd that we're last this pricing. we've say I'm and out place better the than question job been on

believe we sure did making and we're curve. side price/cost X%, of what the Our inflation the and on increase that price of announce kind it the many subside roughly of we're call in much I'll realizing We increase to business. or parts increase, X% cost positive at year, of that a sticks making normal sure the that our has doing price moderated job better the that price kind in that of more beginning

our And rate for valve be seals run are industrial-type business. mechanical pumps. and would general then business The kind that the so of more

margins making of environment acceptable some to the It's our but gotten allowing we're continue risks think project we and EPC with get quarter we users, talked done large projects. project the And is very on complicated pricing, we've sure then selective good really deserve a even that are but for on up in sure I making really, that the job a that perfect, we and still the say before our I'd bidding larger better. And margins has complex project what that it's us our price quarter end projects. say last has pricing really can not team we the we landscape walk through about overall pricing. the to And take that and would for the deliver that working and

And so a year improved ago. overall pricing substantially from environment has

initiative, of And move say component is a pricing into then and part the We to the there. as we product into see you'll And think just what I'd see excellence I back continue this the half as more product as XXXX. year of families big constructive roll more just we approach initiative. so on the product we next year pricing more customers or as a be mature a kind in pricing pricing. so out and specific excellence the of lot is on get We'll that disciplined to and over

Damian Karas

XD XX%. above Understood. out you then And the growth bookings called

D. you update on So give I'm the on kind Maybe is an just Any curious possible the adoption you how could there? think RedRaven, views third is tracking? on of us updated what

Robert Rowe

Sure. Yes.

been unplanned assets more of very The to we prediction. We're of instrument add or kind make up good We note a assets data program and to it say I'd is system well. to kind we've system or a was monitoring the really job on what the do progress analytics What we're algorithms and a to X our say that to it's of finding I really thing really that predictive developed, other valves when And They almost is all to the we then what our repeat and the kind high. get doing wish working is within the of now customer asking on is orders continue I is would downtime. positive do here. customer get now. feedback that solid instrumented. we years allowing And continue with finding customers we're avoid X,XXX pumps collecting, better we're is incredibly that typically facility, is our faster.

where vacuum them a we through of we're this weren't process the my to million traditional talked product, system. aware about their So prepared a saved able in a condition to remarks, $X potential that revenue with alert DCS day we dry lost because of they customer happening

if very years, XX I'm XX to all, excited will this. I still full about fast be instrumented. if most, forward not And we so think control think do I

doing like more things. terms we'll it think than this and right adoption. in we're inflection got RedRaven up growth what of also We've case an feel rate at now, So is. studies I some even point like great I the feel pick I we're see

analytics better side, when be solutions the provide we the ability allows it comes truly much us control. conditions our believe then And digital that of full the provider finally, to and a understand I'll just equipment, ability say kind to instrument flow to these predictive to

with system we very and facility, And we it the operating through this become to close allows us services. so incremental a to team, and when add pull parts

benefit seeing aftermarket a when our installed do at already we're RedRaven tremendous we have so sites. And on

to the I expect focusing come more to keep solutions more ability up, this. our generate a do so talk within on full-loop to going inflection And we're environment. expect and and us to rate I about

Operator

go next Stifel. Nathan with to line the We'll of Jones

Nathan Jones

is in margins were talk the what is still so or below was margins but they difference in on ago X Can today lower. revenue basis revenue? higher than where that in it XXX where has gross XXXX, years business you then versus I are wanted if XXXX higher to about slightly points obviously, at question saw And at is the first from gross go 'XX-'XX, point here COVID XXXX, back margins that compression the And a guess had In I point. back we gross the there. heading to right margins. everything. I you're to look gross back direction you derailed in still

Amy Schwetz

So start can I think I'll we -- with mean, that Nathan. there, get we back

how appreciate I the through embedded our expansion in so thinking of the that terms long-term question margin got in And we're operating targets. we've

by I'm margins So expanding more XXX we've sorry, about than margins gross points. this operating XXX basis talked expanding points year -- basis

in QX, margin from that As you can see majority expansion. coming the of gross is

is so outlined that believe frankly, levels XXXX those can and work move product those margins which to forward. already dividends higher showing that terms excellence, as that we've operational than we to get further expand excellence back us levers And of the or, in and we

operating The XXXX this in were XX.X% to in point is would the of XX.X% second quarter that one that saw I year. XXXX we thing out the with respect versus margins

deliver XXXX margin solid saw on in higher which at to what both operating those to us make continue gross via years. believe footing end other than stronger within cost frankly puts than I So we'll we've to company expansion XXXX, seen the what to cost categories previous in and an shareholders we value margin control our

Nathan Jones

then guess going be is margin. follow-up the to gross I

typically historically, back lagging. on FPD margins where you to on of has have but historically back kind specifically that's where actually the because margins, Just FCD it gross been been is if one gross look higher. is FCD,

get path that if what's something to changed for maybe gross talk able there's about the business used be mid-XXs the mid-XXs that's gross back So FCD. to can in to getting changed, towards of you margins? there's And nothing that business? kind to You if structural margins structurally

Amy Schwetz

Yes.

mix bit our providing. we've we're say industry, a historically. little both long-term we're is for targets in balance a in but operating the FCD that an where So that I due And shift that business, to than would from margin lighter perspective, seen that in

So on of to business, valve really more faster. ACV, automation and to growing bit piece have isolation balance but isolation of we the grow our a a continue business, little focus the want our been

we talk So been over valves that has I'll comment us. that that of impacting growth see driving are some as generation, that isolation mix power time. about is that And we just

forward. second long-term valve in the we're frankly, see of targets but opportunity quarter at expansion, That tremendous in FPD, margin margins. in -- business a moving operating stopping for growth said, terms we in we're on our And the not

and for we better. year, start that see do seen second half year. to than way to business. quarter of XXXX next So in, what need a what the half starts in going get will in story, journey product And excellence with we've We'll our really be operational valves the in kick the the a first The Scott but that do execution FCD. excellence pointed bigger is as is of out, the this

just that not back confident move into of we're year, will be as margins in we the XXXX. those expanding the half So but

Operator

to with Linzey Mizuho. go Brett We next

Eric Look

for on Eric Look Brett is Linzey. This

quarter's from on the Focusing Asia China's on terms about to some color improving X%, Asia tick it's sales should contribution China Pacific, we up of and and of think as Pacific nice maybe in see How well? last outside bookings a X% growth. to region

Robert Rowe

side. China, do China, we've Within on both and X essentially side the large the pump that Sure. China facilities got FCD for

projects towards say, we not there. And within and clearly the within China investing those we're our I'd like we're would at winning are well feel importantly, but say teams positioned base. China, probably installed so this geared point, capturing aftermarket reasonably I more in then

of kind point. that's for area say this I'd at focus so the China And

little I'd we run believe we I And forward in XXXX. XXXX is I -- a Asia lower as at do of years the Pacific that business when say year-over-year, we would and But ago. of kind there than investment optimism expect. increases into across even it at what projects then That still look terms move rate broader -- and compared we slightly down. that to Pacific, Asia is it's look is

And most teams so got well And Asia got amazing an represented base. in Greater installed We've Pacific. countries. think in I we've

And so we well, continues but reasonably the the like seen perform expect. business project haven't to business aftermarket we

comes I put going the think forward from I where we're on focus And in and But foreseeable so to and it our look, efforts is here. the future. again, up China commitment not think growth the

Operator

question from Joe final today Goldman our Ritchie with Sachs. take We'll

Joseph Ritchie

beyond business So Scott, your XXXX. And comments super of on think kind for like this the aftermarket positive. I'm trying through to

we Or orders into just the quarterly it that going the translates sustainability and forward? rate, the right of is that's $XXX so capitalized into kind should run that like year? around revenue thoughts how million basically next is consider of and new current something And any to

Robert Rowe

seen demand, think utilization haven't anything the little of spring in Like the the bookings but higher bit a juicing a crazy quarter-over-quarter, said, you projected what have progression And we've XX steady element is with We last to seen, Sure. turnarounds. a not or we months ton. one-off second anything this kind over here. quarter. there's I again, of market what just here nice, rates, that's or did I pent-up like seen And this we've out if

as we activity that. uplift around quarters was say the here. But quarter continue an the And into in second overall, should so there market look forward the I'd

is the and enhanced probably valve sure really both business that design then and biggest focus on creating And driver entitlement to organization our the pumps secondly our new we're make here. winning

pumps on the and do so world. aftermarket shorter quickly, installed our And valves we're on seeing massive of get more times, capture installed base the a base say of and being what that this And ability is responsive, I'd track initiatives there's moving quoting We have we up. around up. lots lead capture our just for capture the all of rate, room around move improvement with rate rates those to

something little we I'd say may tick look We continue sustainable. down is as growth this a think I a in trend that maybe But overall bit rate so quarter And we that, go should nice third or rates in the forward. as at steady progressive forward.

Joseph Ritchie

one for my follow-up then Amy. And Great.

Just sometimes know lighter, on the I issues. like was there's uptick It seems a receivables but bit that quarter. for free tad flow this cash quarter timing

cash about And that your it just flow then a just So year? are is for free to of right timing for expectations kind think what the issue? as

Amy Schwetz

absolutely. Yes,

collection going cash So of receivable was more out we we a related perspective. door was but The result not completion free of challenge percentage a in knew saw to build any projects. when terms of on timing the went QX products from that flow we be accounts issues when as those a milestones hit

results. set really our And fact, flow picked for first on a little up generation from up So a guidance bit in strong standpoint. we half second think really half cash a our we're

XX% of we for XX% to some now of cash full So conversion year. previously the or in of anticipating better the XX% year. were level flow And more thinking we're kind free

and strong the second year in cash So continue in progress points to respect the half of had in on to generation management. and that with of second as the conversion year the we've the collect really strong importantly, make half flow half first expect a it revenue the we to inventory

both So generation we're excited flow about broadly. free going, cash we're with primary where management more and capital working

Operator

conference. This concludes for thank you We participation. today's your

disconnect You at time. lines may your this

Flowserve (FLS) 30 Jul 242024 Q2 Earnings call transcript