FLS - Earnings call transcript Q4 2024

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Operator

Good day, and welcome to the Flowserve Fourth Quarter and Year-End 2024 Earnings Conference Call. Today's conference is being recorded. At this time, I would like to turn the conference over to Brian Ezzell, VP, Investor Relations, Treasurer and Corporate Finance. Please go ahead.

Brian Ezzell

Thank you, and good morning, everyone. Quarter Update. Fourth Flowserve's to XXXX Business Welcome I'm and Financial Chief morning by Officer, Flowserve's President Scott Rowe, Executive Schwetz. joined this Amy Officer; and Chief Today, on an and will from Scott business highlights overall performance update quarter. the and Amy our provide

open question their one queue. questions. I'll keep one to the follow-up question call ask Following the for you that we'll please return comments, and to and then

to Turning Slide X.

today. information Actual will contain may forward-looking that available As as risks reminder, upon of our SEC to these our discussion due be filings, a and which website. are results our in are differ statements uncertainties, can based and on found discussed

Our today include measures. comments non-GAAP also financial

fourth and directly I'll today's the most and reconciliations which measures earnings comparable presentation details both can over on it to that, press in With quarter our website. of release financial Additional Scott. our to are turn GAAP be found

Robert Rowe

equipment morning, We a in begin XXXX Brian, I'll on quarter, nearly and you, targets. of Bookings improved X. year fourth good the progress execution growth for and were Slide towards Thank with the billion significant results our everyone. quarter strong Adjusted expanded $X.X basis delivered the SG&A, the strong capping we gross to margins XX.X% aftermarket both operating XXX of expansion marked and of in eighth quarter. XX.X%. additional margins This year-over-year quarter leverage from in points consecutive margin original with bookings. and delivered adjusted

revenue we drive backlog year continue conversion as $X.X near X.Xx to of exiting was while record Book-to-bill with billion. the

executed largely dollar currency third strengthening outstanding in we performance for will headwind, more team XXXX. in The $XXX on of with update Flowserve strong completing call. as cash an was improved order of Operationally, in working detail later October. the provide Amy million the supported capital Our quarter when the quarter expense acquisition. quarter. year Overall, incremental interest in our our results to in U.S. provided we to anticipated plan and the on translation drove operating this related Mogas disciplined focus our delivering along the higher flow in

X. teams. last continued Slide QX commercial end strength execution our to Turning grew driven XX% markets year, and in by by bookings strong our versus

see from total continue for We XD generated the consecutive quarter bookings million. of We million bookings, the growth strategy XX% our robust representing which third with awards $XXX to of $XXX aftermarket above our was quarter.

driving Flowserve are continuing We laser-focused grow customers higher of dedicated our on and to at service portfolio. franchise are aftermarket the aftermarket to accretive to our our value teams levels margins

bookings mix year XX% equipment quarter traditional within a new as markets. last original versus with across energy healthy process grew as Fourth of industries activity well

for award quarter million in the in new largest nuclear supply plant to a in approximately order Our $XX was Europe. pumps power

second than more quarter, of greater consecutive bookings million. the million nuclear nuclear the awards representing $XXX $XXX For than totaled quarter

Our nuclear participates generation storage. be were The and XX% more or and bookings, opportunity in versus hydrocarbon energy traditional Flowserve included like and to significant natural power the period. a to newer from continues cycle coal forms than like virtually battery power which up traditional combined year all technologies gas power end solar concentrated power of market both power power and prior nuclear,

to customers Flowserve. for to deliver $XX next and continues with $XX projects create awards approach value the more project of selective preferred that Our in margins largest products range bidding large at were million our to growth million. our

rates stable asset foundational we activities utilization driven strength Additionally, at our and capture continue of operations base. in see business and MRO improved installed customers' our our by aftermarket expansive rates to short-cycle across core

X. Slide to now Turning

position We of margins, bookings, reflecting grew work on substantial the our EPS the strong strategically an completed and and quarter, significant on Mogas cash we expanded enhances XXXX, to our the customers in our diversification generated acquisition, world. gross enable end growing expands adjusted operating shareholders. execution fourth efforts. The for important and XXXX and back flow, that further which delivered mining creation hard steps sit and exposure during minerals, to and market strong value our the growth company all associates offering Looking meaningfully around and we and

XX/XX the of a significant of we We run operating are Flowserve progress Flowserve our also the improving which areas launched year expansion. excellence, the margin improve comprehensive and across business We with operational further and framework to portfolio execution last made the processes in consistent framework, system, our both way company delivering our excellence enterprise.

turn market and outlook now the we address X. XD me as for Slide XXXX our to Let strategy

continuing progress and confidence Our XXXX. deliver targets, ability we to our further significant with in anticipate and this fully in XXXX our gives momentum on XXXX us

is deliver the on positioned strategy regionalization. capitalize initiatives remain trends on ongoing Flowserve to macro as energy to critical including as XD growth Our transition Diversification decarbonization expect strategic in XXXX well and we build global grew where and and well have monitoring prediction driven by and bookings XXXX On control within we advanced of activities. believe system bookings full XX% the energy we space. grew X% most digitization, diversification decarbonization strength new and the nuclear for

run revenue and of higher to our scaled capabilities year, regular capabilities domain XXXX that assets we We on generate provides pathways their RedRaven continue in assets. basis ourselves value there monitoring our capture position We utilize beyond. aftermarket by recurring a overall improving to in the customers, to are rates with digital for the reducing and the cost XX%. predictive increased expertise believe In operability their our demonstrate to the even

in XD to Our XD strategy we in the growth today's see to right one strong continues be expect trends XXXX. and environment,

Turning oriented target These constructive long-term activity traditional and industries projects, MRO remains strength across end and for our opportunities end to and outlook With XD support to growth. markets. our aftermarket of our in X% markets, continue Slide X. organic

investments. of Key security, global megatrends regionalization significant to continue electrification attract global energy and

is Our overall funnel last roughly flat XX-month project opportunity to year.

opportunity end power in generation back trends. markets of is power the with and projects for mid-size smaller than more period, the growth strongest new up funnel an year prior in particularly our center XX% range. on However, remains in at the the driven by electrification and the level, increased healthy elevated more data versus funnel of and The need some to

We aftermarket remain on and expect at existing process as well over capitalize levels are opportunities these to solid positioned several utilization to believe we world's quarters. we the industries traditional last we have the demonstrated

Slide X. XD to our Moving in market differentiate products our to deliver we critical leverage Innovation remains technology to as strategy. the

be to to Molten The hydroxide world's process highlight plant electricity. The customers project. heated flow our the MASS Denmark in with control generate Storage in essential storage in During are which heats converted Fahrenheit. X,XXX the Salt energy is or degrees we XX we new a called the steam, transition supports them molten energy high-temperature customer sodium MASS hydroxide how to example products collaborating our can equipment To Specialized this innovation journey, over an severe year, of market. introduced environment. first on at service, the the

Additionally, this technology carbon nuclear used concentrated like small reactors. applications can power, and future be in module solar capture in used potentially

standstill that We A of ZE also conditions reductions Zeal innovative X our goals. emissions blowdowns customers' and launched pack field another from gas through achieve offering, enabling ]. gas operators our supporting to decarbonization enables technology XX% up dry emissions [ to

RedRaven. extensive and modeling Flowserve offering digitization our challenges. capabilities our We our new in biggest expand and of positions our their to customers continue tools to enhanced combination we combining by believe through analytical uniquely solutions with flow expertise domain fluid Finally, this control help with control

System. I system work system business for committed Altogether, we consistency organization The together Flowserve. a strategy effective business through growth With connecting deliver across business will resiliency. margin business customer focused for deliver value and to innovation creation and critical backdrop Business which Flowserve defines long-term and remain execution. desired expansion growth, disciplines X of and disciplines the the how These approach unparalleled market to across in our X we customers, to variance outcomes processes are profitable leveraging strong our X drive superior turn deliver and in to will place, cycle our consistent units, delivering Slide our believe to functional now Flowserve strong excellence. we running the we Poser an now

operational Our its program excellence now hitting stride. is

delivery further improved to We floor performance while opportunities roof our on shop have capitalizing reduce and line. productivity

we progress more While and we believe we made have beyond. opportunities have in XXXX operationally, great

program excellence its in portfolio Our stages. early is

we've continuing to are which are for and complexity the product in effort, business advance from encouraging. units very named XX/XX in CORE was Our reduction XXXX and we launched ago, year by launched analysis units. XXXX the a remaining business program two over three Early the adding

our We have a and Abiding pricing eliminate rationalize and overall the more our opportunities contributing. service and aren't identified complexity for offering our that buying to as improve in fully products customers. we best levels services approach to deliberate reduce

program. taking this revenue roughly fully XXXX, impact the the negligible the that business Flowserve margins benefit will while will by accelerate gross across the We units. year we at Our actions implemented then remain the current is program points basis all be is as expectation in the generate all anticipate excellence we units Commercial be ability during our of core move will will next XXXX and XXXX are level from product in in program from XX XXX half fully of points program we the second year. off the excellence to this by basis confident to which expansion portfolio margin launch, into program the business five as kick product

to and account to management continue management and to detail. significant improve value turn the and our In focus we Amy to With customer about profitable will results in discipline, Commercial summary, that, to discuss to call progress outlook excellence I'm made drive greater growth the opportunities on and over experience. our financial excited I'll funnel in XXXX, significant create XXXX. continue in pricing

Amy Schwetz

and good morning, you, Scott, everyone. Thank

echo let Scott's First, comments. me

full in the our pleased opportunities our excited to quarter are for are XXXX. We the results further and accelerate very progress with and the about in year

adjusted we with earnings margin the expectations. in quarter, billion Slide to into $X.X the with flow. operational our fourth strong delivered of plans to Relative cash nearly on detail XX.X% in coming the We and of per adjusted million another share our of operating were operations bookings, -- Turning quarter of operating XX. $XXX underlying performance and greater line

Beyond was by $X.XX our EPS translation. adjusted foreign impacted currency negatively operational performance,

shipments occurring our absorption for This costs earnings in In to quarter timing impacted in minute operating operating roughly quarter, a in margin Mogas results. profit. more related close. was Mogas adjusted the XXXX, by fixed of and October outlook strong share negatively neutral not the led our adjusted interest in the our addition, higher Mogas in financing about with I'll impacted and by included to was acquisition sales in shared to have $X.XX. expense In prior lower negatively was shipments we about profit October. acquisition-related the cost in guidance the Mogas the

foreign while currency versus quarter, approximately negatively XXX sales contributed the grew about last XXX overall impacted acquisition revenues reported basis translation Mogas by points. growth, For basis The to points growth X% year. sales

Sales and of muted as grew growth X%. quarter year's down of revenues last equipment in this margin revenues in point us of the of quarter, year. fourth the the basis gross percentage We expansion. did was along The our I the repeat SG&A which efforts, completion in Shifting revenue project an which XX.X%, We the last fifth was versus year-over-year Mogas positions fourth quarter million X% year, corporate quarter, expected quarter increased improvement. generated with Aftermarket representing adjusted Phase due not quarter, by operational original to meaningful to the adding of margin which due of deliver our Jafurah margins. to partially phasing in offset from largely to XXX gross quarter well our Fourth sequential portfolio by Flowserve adjusted increase of R&D investments. business the in launch $XX incremental a consecutive system, margin and includes excellence continued

year Adjusted XX.X%. versus increased the basis points operating margin XXX prior period to

million, and Our income representing increase the more best operating versus than XX% at quarterly the margin last $XXX highest XXX%. incremental a of year year Adjusted of year. our was

release The Our the X%, Compared adjusted expectations from quarter the tax valuation tax XX%. of for in which rate the certain of prior adjusted at rate. allowances. quarter adjusted line in This benefited rate structural EPS negatively with versus year impacted with to was more $X.XX. quarter fourth fourth rate rate was approximately in year line fourth tax change last quarter year's tax our by

in headwinds adjusted these noncontrolling modest for fourth we interests, quarter. $X.XX per of the expense share delivered With items, the and combined with additional earnings other

FPD with starting XX. bookings in strong last versus segments, continued FPD, with our Slide XX% to year. increasing on Turning momentum The

combination with of a the expected, coupled year. increase the an projects of margins last declined Despite of SG&A in of exceptional meaningful comparison adjusted XX.X%, sales versus XX.X%, last a last points basis to As margin translation. period FPD generated increase XXX XXX versus the phasing large year due of X% adjusted foreign the basis decline, point currency and quarter operating sales leverage, negative the FPD in gross year, impacts delivered FTD of

the made We has progress are FPD significant pleased with very this year.

full year, XX% margin to was targeted by deliver to FPD's of which we For within the XX%, XX.X% the XXXX. operating range adjusted out set of

a FTD operational continues selective from productivity to more through to also generate while bidding benefits our excellence program. driving approach

expansion of complexity programs see reduction the these in We FPD our XXXX continued margin further from XX/XX maturity expect program. to and in

were sequential for margins in operating Mogas absorption a oil I the under flat shipments gas. Turning original to contributed by slight third strength driven were FCD's the adjusted given quarter, growth versus of Slide XX underlying margins and quarter. FCD's and respectively, bookings XX.X%, FCD, and In operational bookings quarter, sales both XX%, and growth FCD, and adjusted the in earlier. for up margins respectively. while related Absent timing of roughly including delivered in in improvement and quarter. the the growth XX. year-over-year. general that the mix drag a Mogas, and XX.X% increased bookings Mogas FCD was X%, quarter sales aftermarket points and were XX% Mogas, mentioned of equipment industries XX%

FCD exits conversion, solid mix and improved execution. momentum. We're benefiting XXXX with from enhanced improving revenue

margins focused accelerating of on improve Flowserve expanding and integration through FCD growth opportunities the execution leverage while are as we Mogas. business We to system driving the also

Slide XX. to now cash Turning flow on

year very million, cash our operations strong of million. $XXX from bringing During operations $XXX to full the quarter, from generated we cash

par As a on adjusted sales, last was fourth primary percent working XX%, of with quarter year. capital

cash improvements by continue in We conversion day improved in to our see which one cycle roughly XXXX.

area focus we the ahead continued team. drive Working leverage capital improving a runway management more strategy. we to seen system, inventory operations the system benefits And a while our we is Flowserve of our for as efficiency standard business see of have

the of flow XX% we for more strong significantly our generated than million, year, ratio or of highest the For Free of than cash XX% flow full $XX more in with our uses cash included year and acquisition level million, capital $XXX free decade. expenditures a conversion term efforts have dividends for term momentum. $XX Other was reduction. and target of indicator and sources strong of area in quarter million conjunction during the our Mogas and our this a a loan loan increasing cash combined with that in the a higher

XXXX our on Slide outlook to XX. Turning

are sales positioned targets. momentum significant of markets XXXX, effort. and end a As healthy once to make further well backlog, of Scott the supportive towards a our reflects progress which from we outlined, growth to again our In XXXX we advancing XX/XX strong XXXX, organic X%, expect starting X%

year expect we exchange a the sales benefit negatively points. growth full X.X constructive recent net ratio to the to market We basis dollar. book-to-bill U.S. reported continue be XXX currency sales expect anticipate sales points approximately Currency offset on somewhat We stronger from prevailing over by reported XXX from will given growth see backdrop. basis impacted we acquisition. as the rates, headwinds foreign Mogas Based roughly to of

profits. expand to we drive a program to XXXX. drive and as simplified costs to reduce more higher and volumes operating portfolio. anticipate expected is our growth Turning Mogas also in product to leverage We gross continuing margins through profit XX/XX

million $X This estimated $X.XX from benefit. financing share an which partially translation. to will to absorbing operations is currency Mogas $X.XX assumes we adjusted guidance acquisition adjusted by expense includes related foreign of Overall, offset $X.XX expect benefits. per on to includes estimated interest Incremental the synergy cost an $X.XX. expected benefit earnings earnings of headwind operational Our in-year the

through quarter trends will excellence of our impact earnings with the the with XXXX, guidance accelerate the to XX% synergies, earnings first including of In to year. benefit anticipate highest. our prior of quarter earnings historical and similar initiative represents the we benefits contrast an be fourth versus increase quarterly of the the revenue year. portfolio lowest profile XXXX will and The along the At the our earnings adjusted midpoint, Mogas, from results

aftermarket XXXX sales on as quarter lower is to We completion basis. expect be percentage of first offset a the strong similar first and of year-over-year growth quarter revenue to earnings by

Slide capital on to Turning XX. allocation

deploy We continue long-term highest the cash excess to return. leverage our framework to to

Our per of $X.XX authorized Board dividend share. has quarterly a

to repurchase expect also cash to shares offset our leverage We compensation. to equity

invest the focused are in on organically through business continuing to and We growth, for both M&A.

margin We and leverage EPS portfolio, have continue accelerate scale opportunities pipeline strategy, both diversify further and our M&A a to drive review XD the strong actively expansion. that would and our

$XX efficiency to For year, expenditure expected $XX business are the to our drive capital operations further the million million. to investments grow and be in

let of and team. significant close, value me cash am bookings, all I Flowserve sales, how delivered metrics: As in reiterate I flow. We XXXX proud across the earnings

is me call our unlocking Our XXXX Scott. value back With shareholders. that, for let creation another guidance now step turn to towards the further

Robert Rowe

Thanks, Amy.

Before we We go tremendous delivering made open progress in and we step financial to towards the XXXX let's our targets. another represents XXXX, call meaningful XXXX for believe questions, Slide XX.

growing. end Our healthy are and markets

strategy is working. XD Our

Our is benefits execution pleased and and front business improved seeing remarkable progress the Flowserve significantly, system. done. opportunity has in work in are early we is there not the more we our know with Overall, our are we us, and of XXXX of but

achieving our today I before Our and have confidence approach represents these XXXX our results. team step than XXXX another more guidance and targets to in ever to deliver our

map and call Operator, excited our Thank the ahead are a now for to clear significant We deliver open and customers, associates journey our shareholders. road questions. value for have about the our we'll you.

Operator

Jones from Stifel. our [Operator first Nathan take with Instructions]. We'll question

Nathan Jones

higher levels been with They've capture around up I bookings in they on to last a over the than if you've talk the aftermarket two ramped our little certainly growth years to wonder drive a I'll bookings. start the about deployed drive guess historically. the and more the aftermarket I few question strategies that really could start aftermarket just to with. rates you ever bit

Robert Rowe

the in It's aftermarket don't would Sure. several would the new the be the that's result I as if a $XXX on quarters We're that been but in teams. a is over know this absolutely million. X, $XXX now about work certainly, million from good bookings. the we've Dayton, floor XX say I quarter. of super And number the excited a aftermarket said, And you bookings row

presence massive we're We've we so, great local both high service. customer have our level that with relationships. centers. what valves. strong response got And of a And is base pumps really focused on quick a We've installed of got customer and

The wins. within is mantra teams speed our

focus we of so customers, And cycle of the quotes, time reducing parts cycle repairs to substantially reducing available our to cycle time times on and just being the them. our service of reducing getting

macro this. so card move continuing can within and the are And aftermarket can that level, we're I'll infrastructures capture add on just reasonably And then up, those maintain nice that rates and that we use XXXX world backdrop around the high utilization these the good. beyond. expect are big a to and progress the continue The we levels that with we've see at got make to relatively is in a and teams. to We plants confident we

on like like are we aggressive we continue -- we'll businesses. we rate where growth move up. And to executing targets got of with aftermarket our feel like all type so keep we capture that we are, if We've aftermarket. And

Nathan Jones

question framework, initiatives. the your follow-up Awesome. XX-XX around going my core to is be I guess

found was that has with don't covered it accretive negative in you to interesting -- kind profitable a always on aren't every Pretty of to the that of be that the see of headwind deployed profitable aren't revenue company it's slide getting that seen from EPS a to or side. much comments getting are out expect to that system really sales. this out the customers the headwinds I have headwind those products I One sales in of has

is I'm to approach something why headwind just these if expect a should that or you wondering can revenue in we maybe XX/XX and seeing your that on comment just from not that? future the initiatives, -- you're

Robert Rowe

Sure.

Let of me to get for everyone just provide a context grounded. little kind

three journey, XX-XX year. our reduction but this you're You last for of well just reminder initiative on essentially, XX/XX core a within our everyone. the what units We doing. as business complexity that's call We for launched know because

type in a reduce and ] long of lot time, pareto to your for [ has a long, complexity and approach Flowserve around have the complexity. using been we a You're business

effort got we've expectations is we something to go And as so that's this initiative Flowserve, impactful and really in high forward. this

to think are about we're two are headwind of reduction units we're were products we that that SKU in offering. the is at As used full our like that is than, the best and indicate, negligible And those SKUs point, them our our The revenue seeing magnitude revenue this market. in we XX% best in those as to as kind that invest philosophy what we to XXXX, at the our of as a like to best of we you take bit year best to XX% impact is be and that to resources a product channel repositioning to by our year. somewhere start now customers. our business that going this, sell is feel that in or products of little a customers. into out least

X things we're how with That's so business today. two we year in see units. And

But to that I'll that efforts we here, kind closing And year doing full margin the in add XXX-XXXX kick we'll in of I to of us maintain because are gross the fully units on off think guess of on will we that more level XX/XX. expect we're with basis a then see in side, we'll the we probably And XX/XX with other just expectations And they are now methodology very on companies the following what the our rigidly business done that and I'll I data margin track what have we able are the we say shows show use XX/XX, on the and XXXX. revenue XXXX, framework. points when what into as won't again, XXXX. X units the impact be and the be. until up in think that dynamics in business

start excited and that. we'll accelerate about so XXXX, modest improvements improvements we're We'll in pretty those and see And to beyond. in -- XXXX

this we put we we'll remain continue drive reiterate goals we points that of basis our initiative, to portfolio XXX kind Just reach which excellence, plus long-term that as confident under our

Amy Schwetz

of say factored And that I revenue that it's about there our we've Yes. to as just another negligible of talk I add X%. into is impact Nathan, we think guidance organic to might put way out X% sort that

So potential year what like? doesn't it more from look XX/XX to would our revenue our EPS necessarily X% And could reach sacrifice a look that like loss guidance.

Operator

We'll take our next question from Deane Dray with RBC Capital Markets.

Deane Dray

Good guide we'll the think start morning, expectation one that above Maybe everyone. book-to-bill. on be 'XX you'll with you the on

calibrated are Just that on have far? these projects. of on visibility some mean good I how so you longer-cycle you do some earnings

you So the that giving at is that that to of front observations And and billion over that's a confidence $X be streak able maintaining going And maybe in of end do to. there orders? some you confidence point, there? have some is you'll log come to an

Robert Rowe

kind in on great the I'll aftermarket so of focus just Sure. the the OE detail, hit I and projects.

the down great we've powers of there that up up. is fraction, got all and universe the industry bookings. feel to visibility our a within growth we we I essentially It's down. at when just little look out like within very our driving It chemicals substantial bit give With flat doesn't gas is level. elevated concern. forward a per -- say oil cost funnel forward a Our us would and it's substantially, general at project year-over-year. system, OE CRM said,

continue the grow aftermarket, confident that. to And ability said to we're in our very I as previously,

booked other QX. in for side. caricature fourth year. lot excited in strong over the capture so continue we shifting outlook in carbon that rest the we're now, that despite on the right the power U.S. incredibly space, The kind of the visibility that, to of X.X. we decarbonization a in from are a rhetoric to in pretty things refer nuclear We've carbon And to we everything is the is The some continue of And got book-to-bill away projects about. got the decarbonization. we There's decarbonization megatrends see see more quarter. We've of maybe capture

the continues to So power go electrification forward.

industry there. And for and we've so strong And reasonably great business well. as got us run of rate general been ability has the kind

so, remains in the end trends of Kind in now markets, all the X.X think little we chemicals softness. That a about that is And this spot, before, said stable. years The relatively when we Europe. bit with soft soft. it's

at was reasonably the to what Deane, see we I'll looks And our got an growth. is the last maybe then, in we've to inflection we would so And order the awards. rate start with business, I and add Europe rate saw healthy. expect some thing all run point, project visibility to both nice aftermarket business, good, real type it our North and world, around America, January

a point this There's to it's over a it's book-to-bill and dynamic whether so, at rate lot X.X visibility committing sustainable at And political things point, on, of out there. arena in to going geopolitics the this growth world a or the we've got good

Deane Dray

typically this helpful. but the about free time really knows flow, ask be I That's it Amy quarter. And was would would strong really the in cash

mentioned that think one I leave I'll you that So the Scott, there. geopolitical side. But

of tariffs there you've just and in any seen that headlines the today be impacted as put anything -- of you businesses kind that would what here? terms of on that you need preparation into have to you play is Just would that have see playbook to

Robert Rowe

quite Sure. Trump administration this through We've And then up the the moved frankly, further. in administration first before bid even once with pass. obviously tariffs gone the

pretty uncertainty terms and got is this. It's ability manage situation, some But exactly So there's dynamic good Flowserve product happens. what a what a incredibly tariff that company. that but with scenario. I our believe do what still where any changing would we've we're in also in historically add most not supply the would to visibility I from, level our line tariffs. great obviously to confident the -- in not has been of coming what very to is at view the a chain are nimble of we be We've dramatically. impact got our only

chain, supply actions in that much feel us move impacted. to would allowing the visibility actions so raising terms And prices quicker and repositioning as we of is be

presence geared talk more about we we want so revenue is scenarios the call. the finished just X/X of And this. products, feel for exposure valves work good States, all about than of say, I U.S. that our But today, in up have teams are United our ability with the manufacturing maybe more really U.S. of is still know some goods. modeled we the out a U.S. outside our our and on supply given in what to grounding in seals. the for our is others. We've then than so the significant related And pumps, And very chain this. in manage I'd to

so our stock. we're and impacted bar and where forgings importing of And getting castings is

this. very confident in And new and historically to that. the so we'll point, moderate goes very up, continue At obviously, feel I our has the to impact been that do low ability a scenarios work to though. through with this very number,

Operator

We'll with take next our Baird. Halloran from Mike question

Michael Halloran

Talking couple of through a things here.

the here or just First, And how volume other in But how XXXX factors? on at versus market is then the embedded program that the of the you're look prepared in then out you growth much guidance the we is reminder, remarks I XX/XX your a of about about sit words, when XXX you previously what excellence guys -- plus. on the launch. embedded on like when XXXX. revenue today control you within you XXX the as and know for the a that points reminder, commercial threw guidance those, was in is firmly component much basis also plus to think slide to component said XXX

Amy Schwetz

Sure.

the with and with XX/XX So maybe work what we're seeing starting that.

basis sort portfolio points think using as out of process from envision targets, our that improvement. we're to we'd drive XXXX XXX And the portfolio laid I we would of management. XX/XX As management that

I made targets with we've we think pretty also clear it intend the stopping there. don't on XXXX that

points And basis XX/XX, confident see November programs. related as in felt XXX that of really XXX these results basis we a to plus that becomes so points started we to the

on benefits them. see bullish we're from the we could So that

targets long-term at excellence. XXX was points saw operational we our we really And we other then hit ability to looked basis think I those is around that the at looked as

the particularly think excellence the so on And We've groundwork the tremendous within FPD I we've through running FCD. ops seen segment. you for the if at that that side, laid we've progress results look made

And where from want I of at of so volume if OI the to as getting. that I an the look top really of be end from segment, think would you anticipate we kind would range, we that leverage think our operating

just what place the we overall, hitting on in feel Scott commented his And about reiterate targets. tools think have XXXX I to really good do have it. remarks, what said in to we these So

Michael Halloran

on question sure and a cadence thing. then maybe the guidance then understand making the I And

first if heard quarter prepared the to So year. similar correctly, I and revenue remarks roughly earnings are last

corporate year, this should Just you that. the of these balance year. expectation backlog cadencing on through relatively for any side? the -- about as the some making some expense thoughts on nuances conversion think normal of we about on through the And is normal think sure year? Any then relatively seasonality, other And the

Amy Schwetz

Sure.

we it's as contract reasons by XXXX. that of we kind that with of certain we large at kind of right an being perspective. and the to commented start XXXX I'd recognized look And phasing a in say to deferral earnings we've historical couple that To shift that XXXX, that from across there. with, a extent, seasonality. being unpack start of revenue you're impacted bit XXXX on throughout as think about little our closer I phasing A So

the revenue first of was our So highest last quarter quarter from year that.

does quarter. that the And impact we see so first in what

of profitability impacting fourth begin that of are through really as recognize Secondarily, we'll ramp we I of get throughout the that our XX/XX expect that synergies will progress I quarter think Mogas, million third is the see we've And be that best got of of the quarter $XX to and around year. impacts run to that and kind the the synergies our rate plus to ultimate year year. our

the out standpoint you I performance the first those that the want that so the I over see from quarter of comment And are perspective. will on improvement quarter operating in an see that the things from working are course And embedded overall do the playing year. to

from the improving a embedded there the margin programs in forward. that we to But expect run see those which year-over-year ramp-up to be year interest $X.XX around corporate of And We offsets. that quarter, of Mogas, will just few is touch made expense $X.XX that the briefly on and for synergies. additional sorry. a And I'll are the gross again the things the part that's that we business really be roughly then way going going reflect so we've expense,

being of I XXXX. think overall, in course corporate over neutral we expenses the total see

based XXXX. what saw pretty levels lumpiness But XXXX. in on those total, overall, of kind similar that that to can of be in the saw as of expenses. change in So will phasing close The what number we we some of to see

Operator

TD Our from Joe next Giordano question with comes Cowen.

Joseph Giordano

I unpack that bit. a wanted expense to corporate

the like extra it's we're say things saying you $XX -- it XX stay had inclusive that does You like what R&D we'll then that that like to year? extra XXXX just from mean it mentioned And how was neutral. for and see that. want that this to it higher long going it's know you're when ramp, what's to neutral and aspects it's now what's asbestos. kind definitely like I level? in cost saying of of XXXX, of number this I tied is million be specific and Is of like is kind at of causing to equal

Amy Schwetz

Sure.

general costs. in So of the of corporate cost, just the terms in basket

the that costs do corporate So out not allocate we to divisions.

to include the includes does So think in it that of not elements either the incentives do also costs segment. necessarily true-up and in including IBNR attributed that corp R&D and year. mix, annual And terms every are both incentives, of specifically it dev, we

quarter year. of in this for IBNR included third have placeholder We the a

that, have has begun performance a in and XXXX company compensation, what the incentives component than as XXXX levels, just And one go includes given costs XXXX, in XXXX.I element I both out as point would higher at I year-over-year, look are to annual elevated think about share-based would seen the down these anticipate to Joe. that to we so we closer perform thing which costs is and absent incentive But might targeted

Joseph Giordano

just could commercial the those that deployment? like on I That's if Where fair. in cryo bought And the in-process some on are of follow of terms R&D today up side things. of then you

Robert Rowe

administration, LNG very the life about other products very Sure. United to new in the a global look valves put remain to in We've there's LNG a We the in new side, market new build with lot able excited Obviously, general. got we're there. and on LNG the and States. of our

And very commercialize so have now our to obviously, pump. That progress. good is we making

and to somewhere say our starting market. to that And On kind year. half of aftermarket seeing bring second we're side, LNG. We've gotten to the support the in I the of in positive through already testing ability would we're it's a our business

developed, repairing we're that there we've some and LNG. and out technology opportunities of the replacement on our product now so installing And existing

see come confident back will door long overall in to acquisition, this this to strong starting really is we're a what really be over the market already believe supporting for nice so term, technology and the the of And revenue we a addition the on portfolio us. that end

Operator

Instructions]. We'll Mizuho. with next from Lindsey Brett [Operator to question our move

Brett Linzey

I wanted to come back to SKU reduction. the

underway. business are two the noted You units

on as you think two landing a better benefit be SKU the reduction do to XX% you end And SKU would basis? simplified get more this the ultimately more the at a should being reduction what year. program we of above more practice of Where just think potentially commensurate there, XX%. I standardized And count? XX/XX on throughput reviewed see

Robert Rowe

Sure.

to a the we'll is list SKU, two a SKU business we're the to in the Let reduction that. person, of through just program me start. seeing again, talk about related other XX/XX they're I'll year. now. first the just on units, about then And XX% first and what answer But year that benefits long XX% because the the there's

As the that data we bigger. X, only recut in gets year number

think I size kind units. business forward. those see I think double of reduction, but SKU be up to you XX% going reduction further could will there of so the numbers each the a XX% And we're of to going as we don't to those within go first

continue And enterprise. you're the recut we'll ones Every value so you follow the mix customers your products potentially resources of time for to that quads, your create to the and and moving the repurposing out methodology.

your longer a that follow aftermarket forward. lot repositioning as continue There's that supports a and And whether bit can is starts important lot that get one then And quoting cost side religiously there's as of go type to the as to second in simpler different all products your in best type you one, your keep start a we'll less terms pretty of maybe work more drive to the efficiencies little focused that's in of Again, products, population manufacturing reduce that we different in caveats product complexity, question, overhead quoting these you're kinds or you're of because and knock-on a your of really benefits. a on you're a of best little lot the part a or groups. kind of we a which them customers to centers to different product.

with the this haven't we've date, productivity simplification but other a get seen shop uplift do do any we that floor, process. And the modeled believe, of the then to manufacturing going we companies and of through on what's

from gets ton shop the to It floor, way the simplified process through goes your a benefits. well. of there's the so, knock-on quoting supply chain And all engineering as

benefits that the to we'll sure getting we through work as in to so process. of manufacturing the continue we the step And make are continue initiatives, each

Brett Linzey

That's Maybe just very on inventory. helpful. one

channels. energy pretty inventories for et holding over couple looks years So or the we it backdrop us. favorable maybe to I to of Should in still just to guess pretty we're stay modestly inventory the What's more entering traditional channel And gain more on lean? lean still next if your cetera. assessment comfort some a the deregulation, look operating

Robert Rowe

distributors. be to for level. in typically us there keep Yes. pressure substantially. put managed low a The a lot pulled they're in a lead U.S. back very of reasonably reduce our on much that's this They've their capital we have see quicker pretty stocking stocking at and because well. on inventory working I'll discussion And them will that distributors where times response. the our

would point be And so this come that my to at inventory their forward, up. I view does think start

the think remains the the outlook general American and some -- is energy relatively sector I North bullish. industry across across of

And coming crazy we modest the quarters. to they're growth here would a cutting in would of levels a build bit forward. little I progress I expect on wouldn't don't XX% inventory I expect XX% but think expect as again, like inventory. so build, And I inventory anything

Operator

this questions further you conference at will today's are Thank we there your now participation. time, conclude As no call. for

have may great day. and a You disconnect,

Flowserve (FLS) 19 Feb 252024 Q4 Earnings call transcript