Flowserve (FLS) 26 Oct 232023 Q3 Earnings call transcript

Good day, and welcome to the Third Quarter 2023 Flowserve Corporation Earnings Conference Call. Today's conference is being recorded.

At this time, I'd like to turn the conference over to Jay Roueche, Vice President, Investor Relations and Treasurer. Please go ahead.

Thank you, Melinda. everyone. morning, Good joining quarter you call discuss to We financial our results. third XXXX Flowserve's appreciate conference

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

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

and will materials GAAP reminder, a do call statements other and include the bond available involve of are replay and as based and is Please October contain These note and an risks many being this As expectations available. of forecasts, webcast statements. management information that upon uncertainties, measures company's control. beyond forward-looking event to audio this be XX, our they earnings which will XXXX, are and

disclosures our of release reconciliation in as well you Relations accessible encourage our included and We as are section. non-GAAP results, our both to on harbor of our which reported are earnings presentation press in website to review and safe Investor measures the the our

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

It outlined and targets our Day great ago Jay, strategies New weeks achieve a everyone. where our of was person financial morning, good many few to see Analyst City, York them. in our you in XXXX Thanks, we so at to and

accountability We cost efficiency and operating the operations. how speed, model improve discussed our and new company in our it has to enabled our

progress and of we'll accelerated security which of intersection We updates XD growth success the the energy has further also by our Flowserve provide today. highlighted belief our positioned and driven energy transition well for that on strategy,

reviewed section. on website you the in hasn't the Day Analyst anyone encourage them Relations materials, our to Investor access For I'd who

pleased share performance internal quarter. admirable operating financial the including turn I'm which continued This demonstrated per we results, exceeded of with now expectations. strong Let's adjusted drove again this $X.XX, quarter. our the the to that earnings performance extremely

revenue equipment since highest XXXX quarter, nearly improve the original gross Our margin of evidenced despite with during XX% revenue. to by adjusted the of execution an quarterly our continued mix higher

and healthy provides quarter. $X remain a backlog Xx, bookings earnings growth largely $X.X of our over XXXX billion. This strong markets and to consecutive backlog nearly book-to-bill foundation seventh we for near-record of a supportive maintained delivered With expectations. we our revenue in Our and billion the

results, us Our XXXX third our year raise confidence revenue full targets quarter execution and for EPS adjusted with consecutive coupled third improved provided our the this the year. quarter to

noncash year-over-year a growth. reported assessment per performance had of discrete $X.XX third long-term share. reported adjusted operating a and While was both in our quarter tempered earnings by the $XX.X quarter, accrual our million momentum continue in certainly delivered established to to late and both our liabilities. This related on We the fourth earnings share quarter were adjusted strong expense annual certain per consecutive the and build the we year. for Nevertheless, last earnings impact revenue of

the within We intended that greater actions model significant operating accountability our new completed speed and also took drive the largely during to organization. quarter

will which million the out year, XXXX exceeded in results. annualized $XX we cost goal late be largely now set have reduction last reflected We the

improved better benefits units business improved from ensure functional and The platform. are on driving framework within model the enable greater our processes are segments effective and provides positioning, we an the targeted product importantly, efficient while More operating to support operating their realizing effectiveness. more a X that markets operational already X with new focus the

and performance. expectations confident that will strong I accelerated drive help growth model for am operating financial new the our

were X only by the regions. our $XXX all this million awards to million level referral third $XX at and bookings this aftermarket third million Of During range of MRO across strong included quarter, in work $XX smaller year quarter, million roughly $XX exceeded size. primarily driven $X bookings in generated project our to million with the the nearly awards $X.X quarter, which billion year's we compared last award, the project

As promising are always, likely the timing in move predicting project the award several opportunities we is in and now quarter of to out book quarter, difficult. fourth the And third quarter. saw

has funnel that to project expect next grown and we awarded Our be of to year-over-year meaningful of line several larger quarters. have number a the projects sight we over

the larger project traditional and we and instance, For gas oil East, in the markets. see for significant horizon opportunities our on petrochemical Middle

disciplined backlog, enable The the improved outlook, combined we with project remain that work in us strong our to pursue.

pursuit us has margin these approach large gross that expectations date coming deserve on gross work our to successful in risk effort we this aim process to quarters backlog, the increase and project requires we project as remain margin margin we Our in the for as progression. continued trajectory to proven and This levels projects. intend we on given continue the for of

XD we capture, while roughly we our as energy XD with continue to investments and hydrogen quarter, of XX% where XXXX. a carbon substantial are total strategy, third the the increase remain markets energy bookings year, awards, on exceed line track traditional near to for growing new In healthy. In million initiatives such our in capitalize represented awards XX% on new including over $XXX

levels are The nuclear and our XD of key strategy, expected LNG growth. markets given to strong also the

categories projects well aftermarket a work. and awards significant the While healthy in quarter, we large as booked as in MRO third ongoing didn't smaller amount see of any we these

customers' safety, quarter Turning needs. million-plus anytime fill In remains soon. no to remain to with exceeding quarter, we continuing emissions see this We business. aftermarket highly over bookings, Flowserve trend suited this of third activity and and generated million our receding Most the $XXX signs eighth of $XXX threshold. reductions. the aftermarket marking the consecutive uptime, are efficiency these well on utilized focused of facilities our

Our market outlook remains positive.

early continue believe We to are multiple cycle. year a the in we years of up

indication slowdown markets. a haven't of seen our in any We served

a expect above backlog year growth. to which X, maintain our XXXX and continue book-to-bill will We full support

the X% Our beginning project of increased the third funnel remains quarter since has above year. level last year's and

into and remain We levels beyond. both XXXX also aftermarket expect that MRO and strong will activity

well situated to XD our capitalize energy well on global strategy security investments continue as positioned These a X-year industries multiyear a is energy is Flowserve investment that further cycle over expectation later drive are growth. and have accelerated and is by to supports project for themes growth. expected come, to Flowserve period substantially our for It driving significant transition. underspent decades to

the Let to me over address to now in results third Amy financial turn call greater quarter detail. our

stronger. results greater both by Thanks, pleased good backlog Scott, I'll assessment our our slightly of $XX.X start This expense annual how long-term drive morning, are our Reviewing of otherwise we certain raised operational on to everyone. with performance financial conversion, guidance by in and accrual reducing execution, helped and reiterating which detail. both billion. SG&A years for share the our strong adjusted expectations generated from $X.XX. Based muted have third resulted and results million we quarterly quarter. that in would at sales we produced adjusted our per a and adjusted EPS And share in performance $X.XX. that, The actuarial quarter. We $X.X earnings noncash year-to-date revenue been ranges liabilities for above highest reported even our per level of continued earnings our our and nearly roughly the third X consecutive results

our supportive ongoing benefits the from both consistent new of This operating markets organizational segments, improved confidence end the and design. and of performance comes early

tax $X.XX, benefits. and offset this below-the-line by reported allowance of was quarter of FX share charges which adjusted partially were realignment per includes impact, release the valuation $X.XX earnings primarily but Third net expenses,

prior Revenue the respectively, business. nearly in representing increased all and year, to revenues the prior growth aspects year. over compared the quarter and equipment third XX%, XX% aftermarket from the of in XX% Original increased

solid segment the year-over-year FPD's contributed a level, At sales XX% original particularly were buoyant, equipment increase. XX% delivering while FCD growth,

While XX% FPD. billion, markedly to in aftermarket aftermarket FCD and at a record third we prior backlog and at over as compared near year well XX% maintain revenues $X quarter increased

XX, Europe of and well, East also with Asia XX% respectively. Africa, with contributed as double-digit the increases sales XX%, regions XX% All year-over-year America in improvement North and XX%, respectively. of delivered and notable America our and and substantial Latin growth Middle of

improvement, in focus well the excellence we we've benefit our traction on quarter. leverage from from the to our reflecting generated Shifting significant margins. year-over-year revenues rising operational the as as generated

XXX margin year-over-year gross to points adjusted Our basis increased XX.X%.

improved shift as factors, headwinds increased well Partially for frictional the factors increases initiated year, original include were improvement work, reduce shipments price from chain some backlog lower-margin the accruals. from work as modest including these and costs. challenging over and supply last Additional offsetting compensation however, the from our equipment mix original conditions that equipment resulting was performance-based of market increased booked environment in

this While operating pleased are is a adjusted margin in our improve to we XX.X%, upon. of level further foundational intend year-to-date we gross progress with

believe are last on margin design and a have at we levers expansion to targets. our and combination excellence for of you path month, Analyst focus the As that drive heard clear management product we our operational margin the new organizational Day through our longer-term key defined

backlog levels have to increased as over bookings our past the steadily end the We have improved. consistently margin year our markets in at visibility

the of Additionally, organizational will action model reduction our the modestly enabled of cost exceed roughly $XX goods annualized sold early XX% identified our million in where to the benefits line. benefit goal, us savings of new cost

margins basis increased the the previously impacted in basis, discussed the addition quarter reported a On items, to was versus to increased third prior realignment quarter million of by $X.X XXX charges gross points where XX%, year.

in $XX partially well a increased incentive million million year. to as higher a were which as mentioned the -- true-up annual offset million bad was $X performance-based $X increase reversal. primarily debt liability, $X adjusted last quarter due $XXX SG&A by increase The Third of actuarially to compared $XX previously the from of benefit million to million accruals by million determined

basis a and XXXX higher As XXX early as points we realized some adjusted SG&A plan. XX.X% our leveraged from benefits of decreased to cost-out percent sales, successfully revenues

we maintain these deliver the As to would in better we than our the levels future. revenues organizational redesign, grow including benefits focus, cost from expect our results even and

quarter On million. a $XXX third increased million by reported basis, to SG&A $XX year-over-year

in remaining program pursuing reported items includes executed our increase the just to primarily to realignment addition mentioned, expenses items, to due a $XX related a in increase Velan reduction the million as we In $XX the adjusted also and transaction. million cost expenses amount

XXX year-over-year, a the sales Despite increase XX%. as of declined reported to dollar points SG&A basis percent

by by basis adjusted corporate, margin margin Our lower operating increased which our to impacted at quarter partially third strong expense our offset basis operational and performance, reflecting points. XXX actuarial the this points X.X%, costs XXX approximately SG&A level ongoing controls, quarter frictional

building basis margins margins FPD operating These adjusted points, increases and of XX.X% delivered XXX segment and momentum respectively. FCD represent By of respectively. year-over-year results and segment, XX.X%, with XXX

where Third in execution quarter year-over-year basis increased significant by offset points increase reported X.X%, and operational items year. million $XX adjusted XXX leverage prior versus the operating margin partially to operating was

year the to related geographical than due achieved tax mix in quarter guidance certain adjusted primarily income foreign tax range. to XX.X% This credits. the our full lower third the of rate timing Our and outcome was and was

lower. even was rate reported Our

a to Year-to-date, of; benefit, which XX%. of that due negative our to XXXX our still tax from was adjusted excluded $XX million adjusted finish full approximately it expect results. and guidance our range is valuation well fact, within In range at within XX%, to we allowance also we rate XX% year original the XX.X%

flow. cash to Turning

represents of are flow cash with million our $XXX year. operating million, over pleased We prior year-to-date which $XXX improvement a

addition over reduced earnings, $XXX to significant delivering growing million despite for backlog. by higher we capital working used our In cash and revenue

Third quarter $XX by was earnings flow primarily million improved operating cash performance. capital and also of working driven

cash beginning some have year. cadence year our late flow smooth year now each our improve in operating the this focus out and to positive We demonstrating quarter throughout delivered seasonality last

year-to-date that prior in accounts we've XXXX, the an pleased year. source am with of improvement modest revenues cash, compared million significant Even a to delivered increase receivable reflecting is in $XX I

collection strong, in reduction X-day been versus sales our Our the prior the have by outstanding evidenced year. efforts days

as and we contributed has cash assets also bringing year-to-date contract capital used up million, reduced liabilities the progress to $XX our million. including improvement by Inventory, the to $XX working

sequentially of percent XX.X% near-record points improved to sales, well. basis versus basis capital a supporting declined points prior working as XXX backlog As XXX year our primary and

expect third will We the the and sales working XX% and a which our improvements on to target through and below at focused level Analyst capital a term uses we achieve in capital to payments. in expenditures loan consistent execution. Significant $XX predictable to XX% remain of Day, outlined million reducing supply chain included our in of well investment dividends, to $XX quarter million $XX debt million reduction more our cash XX%

traditional compared million we a to still nearly achieved quarter. fourth year, come XXXX cash more in we the prior While in expect in flow $XXX free robust see to seasonally improvement

Turning fourth to the outlook our quarter. for

midpoint, and our range of momentum an per which and deliver to We the adjusted share $X.XX. At expect results again. operating build guidance our our earnings revenue on adjusted last full year. increase once earnings $X.XX to XX% quarterly of year to with in represents full revenue solid over year XX% year full XX% earnings guidance adjusted

resulting active, greater to expect markets increasing our We year-over-year our than in to X, year support growth. backlog full book-to-bill XXXX a remain

million may range exclude targets our reported expenses as items, the currency well including identified such to as adjusted occur effects expect identified year-to-date, discrete in potential of Our below-the-line $X.XX. the and impact approximately the during the $XX and as realignment $X.XX EPS of year, adjustments items we other of that realignment our spending other

growth at longer-term provide As Analyst path we outlook progress a confidence revenue points operating I Day, This our to have XX% be XXXX supports on margin XXX goals. of would XX%. and preliminary improvement adjusted achieving mid-single-digit approximately highlighted growth, and adjusted EPS of that our outcome to basis meaningful the

to building and model and designed view on XXXX Our a our entering with speed, fully costs. based quality new in organizational our performance backlog with and early on was increase accountability place reduced the XXXX higher

our plan this we on path early a initiatives these will range adjusted expansion levers share. and built Until we over on the XX% portfolio initiate operational improved organic in goals, to Flowserve official usual, $X growth billion and earnings drive focused a that XXXX. believe our are we use guidance XXXX adjusted XX% excellence we year to through and Together, achieve in product plus rock-solid to margin As keep with per in to the drive have then, management. foundation revenue to margins $X to operating right the

over call Scott. the return now me Let to

Amy. Thanks,

our few approval the comments of French the approvals all a timely February acquire We termination intent this previously We to Let in announced from obtained acquisition the of regulatory Velan. on of our add a announced me the Velan now year. manner, government. in except required

the engaged its French in of their the Ministry we acquisition. part While address of review process investment constructive rejected of direct process Economy a planned as concerns, to foreign all ultimately

the We extremely are in disappointed the French government. from outcome

numerous stakeholders. While companies both for we benefits believe our the acquisition would have and provided

However, the targets programmatic which XD XD our and provides confidence our ability termination confidence in scale, above leverages the a growth existing includes capital. to nor generate of does cost in trajectory integrate approach, returns not strategy. well This our change of strategy, our M&A our

our As the XD have to it we over the demonstrated that approach right accelerated time. years, continues past is the strategy proving growth, right X bookings drive at

in support products to this both organically continue invest and will We inorganically to strategy.

are diversification. I overall the We XDs, of markets and each deliver on at will the Looking pillars focused of in believe the will of start growth we products with excess Flowserve's growth rate.

have products, of pump pillar significant the delivering a are industries growth years. Our vacuum of which component few of the last variety bookings diversification and in a enhanced been applications

driven remained nuclear In products processing our the new demand supply including and pumps in U.S. site intelligence. From semiconductor enhanced activity. the decarbonization the part completion, a third to perspective, Upon of for a number selected strong, LNG in a advanced manufacture from to were bookings we will support vacuum dry manufacturing for facility and networking artificial the quarter, XG applications, power by

We broad outlook industry, has the where products. portfolio nuclear of be continue a Flowserve excited for the about to

older countries facilities of on nuclear the extending with these life assets. focused currently Developed are

plans and clean While have Europe emerging regions facilities India to for new and reliable provide like Eastern energy. nuclear substantial

reforming plant include with supply clean complex driver in and pillar nitrogen ammonia annually. to valves the recently energy where The blue for COX key million plant is will carbon blue is emissions of capturing tons The new autothermal Flowserve while Another expected X.X U.S. a facility metric selected the and a pumps supply in to ammonia capture. transition, decarbonization hydrogen was

from provider Flowserve our our to value on of up positions ability move customers. chain become digitize to services solutions more our and products Lastly, a to the believe to We digitization. offering

now facilities Our with it capabilities growing instrumented the at customers did XX over assets and X,XXX optimization. twice rate RedRaven over last we year, offering have with is monitoring, customer utilizing full loop and technology predictive our supporting

and partnered beverage with recently uptime. Flowserve XXX instrumenting over reliability, Scottish efficiency increase to a assets producer

targeted see of variety a renew customers across encouraged and traction are expand these we contracts. and gaining are We existing industries, to

We our to $X. share over a achieve and growth XX% to converting we XXXX XX% profitably period, XD outsized our of our including grow Analyst to backlog Day, intend strategy. financial to $X.X the Overall, billion generating the the CAGR remains revenues on expand adjusted operating to adjusting at shared near-record focus generated earnings while margins at goals X% per

are operating the with We model, operational with improved margin and and confident our that strength our our we our Together, in processes combined new associates value XD for shareholders. implementation program on revenue initiatives these successful will enable ongoing deliver we deliver that the product end strategy with that expansion of markets, customers, and drive will to management growth excellence combined Flowserve long-term targets. help our can

our hard closing, new for improved in and I In associates speed and work for execution, operating want and to our quarter thank the embracing to model drive their dedication accountability.

is environment. capitalize to strategy strong XD working, The well positioned and we on are the market

I and maintain improvement confident in XXXX. ability and corner turn close further as am out our deliver year the we operating the momentum our to into

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

[Operator to our Instructions] And question first from with go Andy we Kaplowitz Citigroup.

your of to Scott, you XXXX? book-to-bill over the see bookings more what's the do us given quarter able forward? book the customers economically next in you'd saying mentioned these there, or horizon, either environment be currents you above know the you the geopolitically, And or color cross that confidence can a moving projects I are give staying level all X? what X you larger on out have number into

that outlook we month just answer happy the lot I'm Yes, our terms say Andy. Day. And saying I'll by not shared changed whole Analyst has a start market at that, I'd to of Sure. in last

the and diversification strategy, up activity, X% you if But just excited growth And the we committed number. showed number, the that actually remain the And core X.X% then growth markets. which X% I'd the core existing we're the remember, pretty through at XXXX. GDP say combine and so was market generating in -- a you that picks least more that about like we And going to XD forward. decarbonization

the And level break our then this so you aftermarket MRO MRO year. again, changed. has super nothing our not if the changing, that. And still a and sites existing and has in between see levels. high very And of We're project, activity it and down see significantly of committed maintained to side. running nor U.S. Europe and refining We that in expansion don't the we're at chemical capability and utilization massive facilities aftermarket high So new right? I seeing

so we're that, assets even harder, seeing And these run higher being with and aftermarket generating MRO.

I and again, so million trend the don't we continue continue see $XXX over in And now been that last that the expect some quarters row. as Investor shared grow for to that X work on a initiatives of changing. We've month. to I in And Day we

seeing we're what healthy. side, project incredibly is the there on then And

And the the project year. year-on-year, so X% since beginning we're is -- the X% funnel of up

within And on like XX%. over customers been backlog we so to and let side, of we've When is of at orders our got that's track projects. to great their happened lot big the a customers, And look up CRM our months not system Flowserve. have last those these the OEMs within those the down many EPC XX visibility all

the we chemical pretty projects that months. next the side finally, the the the list and book XX see are tremendous with opportunity side significant existing kind with of a Middle about refining within industries East, to of on then And both in

And say coming. Last Jafurah valve up award. we is example, since then I'd on but obviously over orders, we was it picked alone pumps X at time, booked million $XXX this the X just Jafurah year,

the a into we job. that So Aramco, X. of given incumbency that our this Jafurah support just confident strong project bus the Jafurah to And up turns we're are large execution as of pick in pretty EPCs and first share the awarded getting now it

anywhere, And lens track We chemicals we've then slowdown them seen seeing there's a business well. any in just really recession, rates. run little in our bit destocking say on And concern And our of there's say, not geographically. by more distributors of high with business. right modest of discussion track just Obviously, of We with bookings Europe. very, we're I'd adding kind markets one rate the traditional now, the of I'd some interest end on as like this. that Americas. very

our year-on-year. quarter about outlook. general up Outside of this the XX% industries good still though, that and is about we feel

this success say And for business we we're so XXXX going we're X% beyond, to the I'd and committed now, said month at what Day Investor positioned right and growing last forward. at through of

And be I have could that then like or on margin in I and more recorded difficult easy supply you've But cost new you last very margin reflected organizational an incremental the sustainability the think chain you're of just perfecting 'XX the mid-XXs you you Scott, results, you said, comp year. that your as helpful. $XX you implementing more maybe and against QX? Amy, going design. forward. in million been program know comment will

actually So understanding, improvement points least in that higher or XXX talked for expectation Could margin is a the basis here? that be and with think conservative given that confidence far at QX level of all Amy that bit so I 'XX. about dialed

start those with, I'll not we're to targets stop Andy, by hit outlined. there going we've as Well, that we saying

we significant We and pleased where with quarter improvement year-over-year. third the are certainly pretty finished

business quarter we each see that is different them as heroic in be into units, of year-on-year, that across in fourth in to will As make this we our we X we're revenue quarter way from fourth thing trend to One fourth little really a quarter. improvement saw we our bit the not look quarter. continue increase anticipating expect third and a

we mix time, are our growth but our at equipment a we the of increase in in bit see will margins where the in accounting our where trajectory and over a stable of to change for to the at significant but QX, this quarter. pretty pump seeing significantly we've of QX revenue really expanded create We QX original it of in business anticipating a majority fourth area from run revenue more were from we year across as at a rate increase is business QX transitioning where last look that nice

those anticipating bit will we're at On margins. us base give an we're going with to that see operating XXXX. a really So see nice margins around a margins to XX% year in gross exit the which to grow XX%, around to margin perspective, gross in

we line to Halloran the with Baird. go of next, And Mike Instructions] [Operator

couple of a questions. So

First on you're a cash and you're the cash in usage the here good about from thinking how it. position on really Obviously, side.

now is pipeline that close? on didn't forward there -- all a So forward Velan on towards of move the activity cash you that basis? of can the think the in picture deal think you Or about a are buybacks at you usage as

Sure.

about So more I'll allocation in cash position to start nice detail at Analyst capital. to in of by saying and a we talk a strategies some position And outlined we liquidity of our the it's that can be have Day. meaningful

offset expectation to saying we that commitments. would I'll is that that by we an equity buybacks practice Analyst at from comps. the with Day return outlined around start our So thoughts the we of the to start that dilution And one things of

cash So I forward. that going think our to can terms in you that's start of expect to see usage something

our From or dividend there, really as as larger-scale inorganic weighing the in increases. we're business, between buybacks choices well reinvestments growth,

a XD perspective. would we complementary of of right product pipeline there now, reinvestment will bolt-on kind like from portfolio bolster into see that we I that M&A both us lead abundant in tell our and and out opportunities you a terms help markets of

at to agnostic I I products. -- the we work same like to M&A through this. describe potential we think that But manage time, continue word the our I to So when portfolio use

create always to through weigh choices have returns with the opportunity long-term value We well. shareholder to those as

the pursuit the in Obviously, add are And funnel. M&A then to just programmatic transaction. Velan we of on

kind put And highly of We've control a on space. that. is now fragmented -- of so revamped There got those hold. it some are coal

businesses to the And And support do continue I potential so the have We we're style would that expect don't XD programmatic to but we're in year strategy. something. progress this anything certainly to ideally, immediate XXXX. us X M&A term, excited acquiring in X about every the to

the the I pricing margins pulling the backlog of appreciate the maybe you're comfortable context the obviously, here, your there's of margin you're that. out that is how And on any competitive in you're seeing to getting backlog receive is being variation specific side that things, pricing if just about environment. we that specifically much Flowserve there? and and pricing the kind then you're how some but of in the with marketplace very that you're more what the give into market pricing and confidence in diligent versus

Sure.

me between I'll kind of that split rate run -- our business project and Let business. MRO question our

On position rate list the finally typically we this balance replacement over parts, price that, in positive all months. valves, seals, of MRO We're And run with I a the aftermarket price more we go think XX our than last strategy. we've costs. doing got best to seen year, the XX or

remember X at fourth years, increase of done increase this XXXX pricing was up this beginning price the one price We'll again. exactly year. in it the feel of new really we X% good a but move for we'll don't like at I our that. announce did we so the and And year end about we've

kind on raw run the on our subsided. basically so business of our good pricing is. where the very feel seeing We're is inflation And rate I materials,

we so can up like And step feel that with another of we kind on of side cost business. the take price

the Middle in that large projects me the East. of still or project the kind would competitive I of with let attractive an area larger very projects not more of global ones some of in this and one kind I'm energy say is satisfied pricing. to potentially marketplace. It's transition in with lanes the the switch still the And very Now terms of

the going we world meet how selective. that And view didn't third of project so fact, given given a pricing current -- in we expectations. the forward, And in our large incredibly away the walked we've quarter from backlog kind and been very outlook and our

the ago, while discipline, tremendously a it's it. to year like it's And exactly better than not so gotten still we see would where

XXXX to of we in group, most as corner behavior projects hopefully, now larger we'll fuller of peer the as in more into terms the disciplined see capacity. a turn is pumps engineered significantly little Now on some certainly the bit start of the

say believe And deserve projects. the to that would we so into the that I we expectations we being in at very put the given XXXX. improve technology We're environment risk will these of close execution and the

again, so XXXX. in the allow that into in the better we margins I the will pricing dramatically believe backlog about with And Flowserve. than It's feel our are effectively go And environment. a the as across org within ago. new I year our design board higher price discipline focus us good to

Out next the or Karas question UBS. of from line Damian comment comes with

obviously, those a mean are reiterating 'XX I later. stuff. targets Good month you guys

that. Appreciate

curious, just these color of projects little grow. the the you there, projects a cumulative was half, of bit lining how give funnel to any second and any think in you can there year, should more for kind timing Is could half of the you size that these sense up next talked about that color really additional continues are I about -- we us of whether any first some provide?

seeing is I healthy, a project seeing where the would say and Middle and is awards we're largest lot size The of the project. Yes. Sure. we're funnel -- East

they've say really, money substantial investing shift now. their made of would commitments looks right a Middle I is economy. to in in of driving big their whole Aramco that mix obviously, terms But meet So good East the really some

content month And about nuclear at markets, and attractive we of addition we've very million. kind the Investor so projects in that, last it, them, call sizable pretty and got then are Day, this projects several somewhere and $XX have visibility between those can and both in million LNG to to $XX there. talked And

side. the nuclear I'd awarded. projects when so to a on the just And lineup really on it then side these is timing we're hard gosh, comment, predict and seeing the say And on nice get LNG

We get to they them visibility the just and to inevitably, slide right.

And so of the versus committing QX from a comments, becomes prepared difficult. first very half did had into QX. half I mention the second slide though, projects we few in

but booked little of of mark we projects see a So nice million of $XXX bigger expect over of None million QX. get million, to $XX bit kind do the the $XX kind to above very projects sized in uptick. an

for to when in next in full look quarter uncertain, over expectations which bookings up. we're have improved be, Timing XXXX terms year XXXX. our they of say just I'd then though, we would at And the is project going show year, certainly,

semiconductor then earlier, And on XD, highlighted the the manufacturing Scott, technology. understood. Totally vacuum -- that you vacuum technology

I'm that on of on a project just that, profit project a of that are kind do you like when you anticipating that? bid caught you nature, -- my attention. So curious, kind like what margin

Sure. good than The really is other and It's vacuum a product competition technology our us. relatively Yes. of differentiated some products. for the is smaller

good is substantial margins And But an say so the importantly, where technology the OE get we capability. has on vacuum I'd can side. aftermarket more this area

front their And they putting so reliability what from expect center they be and uptime when a semiconductors, their in -- would OEM. obviously new customer and a facility of for in is greenfield terms what

repair spindles those the then And what and upgrade so substantially we like OE drives margins and products. we But division. aftermarket start levels really I'll normal at pumps business. vacuum replace for that call to It's the as accretive

add, vacuum has grow. But I to of to want list areas our been also on just

We historically. haven't the job market semiconductor a done great in

as effort especially their now to regions into where this so is. market, to supply reposition to growing consumer And chain get an look the companies the and made closer their we've production really

an that and other very Again, is this to into limited that of so And about technology compared we're this the some put excited competition about. we end can very area we're market. applications, the excited

congrats on continued Well, Great. progress. the

Saree We'll of go with the next to Jefferies. line Boroditsky

Congrats on the quarter.

the what moderate destocking, inventory some pretty Where positive You seems was destocking a the levels catalyst outlook? what given distribution highlighted are channel. in And for today? like

valve Yes. Sure. us, our really for The And modest. impacts again, very division. destocking

we've levels, comments and when their you with that had, a pressure of public comments lot our -- there's overall, teams they're we're just the industry of being say, side of that with been cautious about of some distributors look and -- very And year-over-year. the the on it. But the at I inventory would seeing tremendous minor our general some directly growth our bookings, And bookings. seen so to our it's like

growth expect close to start year actually to in them inventory and XXXX. ordering I so they more the as transition out we revenue And

not we've overall the industries remain for us. general valves about to business, again, major grow the a ability category. very business So it not modestly, our within seen while but only concern positive the And we

margins there onetime per you into Makes had anything should improve step-up sequentially. in normal you FCD expect sequentially seasonality? nice contemplate that XQ sense. And in to Is margins a we Would here?

by actually the Yes. incremental And with third FCD on. that pleased leveraging see We're particularly to saying really volume quarter. that's drop-down we done that see -- we the see operating margins. They've fourth I'll start the in are something they that we continuing job, and the trajectory into a quarter, nice nice did to job a

the expansion, very But gross fourth into revenue and modest margin level. some continue make margin the see as level to modest see at at quarter. to our We'll that we going operating margin and we're growth way both the

we operating pleasing I as plus line sight we're think targets think for going to targets XX% those about an that FCD this sort margin with long-term of about those at to going exit clear really So forward. year of is particularly on what line,

again. Congrats appreciate. quarter on I Great. the

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

Kenny Deane [ Dray. is ] for This Simmons

stay earlier about big question, approach space? backlog in the space Just and you of orders how the disciplined as macro following you impact and the the in you on does up volatility, But price oil way in pipeline. talked some geopolitics, this the through work that the projects

of Again, project feel good now. funnel about Yes. we the health very the right

some of -- in of or XXXX years big governments, of there They're marketplace, their advance. all despite are projects. you they substantial to spending. from there have XXXX, a these from so and if investment sorry, companies, these And on and XXXX And and rhetoric plan big infrastructure this noise into the backwards, lack commitments big out the in go is -- the on big XXXX, commitments

FID OEMs these And what the if projects, those feel at so and we moving. all laid funding backlogs, big into these of are very as out levels, that at projects. we EPC to look point the equipment things look again, where they've awards And of put confident which for is we

that quarter, or seasonality that segments say, can implied metrics the looking about? any free be we should any into the And fourth flow then other mindful talk of, growth of you for cash terms in

Sure.

for upon perspective, up expand the said, the modest in from revenue us QX That we is against would growth XXXX perspective, pretty as quarter that a over provide in from been We to course quarters. revenue tough positive ramp that We're we free cash exit full fourth to just each flow a you to cash we'll operating ratable build X more our will cash fourth operating we'll first the So a a and quarter. significantly. our our QX flow year in anticipate from year would the seasonality stronger see, last more comp as much of do. that, cash can year, we the XXXX. within think move margins flow with generally really from with seeing the we as up anticipate point flow sound as we've exit I And of see

then And every working view on of just more quarter. provide to we're very I'd add, balanced hard a results

were And saw a quarter, a that year quarter second similar. relatively this so first third pretty strong you and

revenue as we quarters. we job year. into certainly next margins sure the quarter, unlike say, we're that all of in turn were to a better would getting making and of saving much quarter the healthy our And expect that we're fourth to And I I'd past, years just in see first the everything doing

of Next, Goldman Joe we the to go with Sachs. Ritchie line

on taken my Nice a revenues, quarter historically, taken versus in you fourth like that you're seasonality call in Scott, because when in big FPD. -- say particularly look quarter. quarter, you've a improvement. Maybe maybe expecting third only a you've And a uptick pretty you've at times the Amy, seen the you I've few answered heard this the last question just modest

several, typically pretty several and I So understand a it's it's because -- just mean like modest uptick. why years, nice help us go back to

said. I'll just And reiterate what just Yes. I

material back We focused are the take wild Joe, on some go you planning, trying we on got And you like and said it, to really variability scheduling especially on quarter-over-quarter. out history, really revenue our the margins. swings pretty if FCD and in side,

again, teams throughout more nice so that planning a the the planning are year. And supply continually job their really and work the chain work, doing progressing

-- is And what is see go call but forward quarters. what going from should it, than lower of to the QX it we you'll rest and But be always us should slightly see, down as you expect provide the in a little first uplift and the about which a more QX. should bit, be But then a strong that. can then and just same, QX in modest the color on relatively QX, quarter on Amy

been from say increased million operate the the with the able is on the be -- makes Again, of to through this book-to-bill that third avoid time. a We for our in QX the where quarter, period that really big to I'd normal to place operations the in the seen make segment. in increase year trajectory, over normal in $XX swing. able a we that that a place, within Really revenue we've a the way way nearly Joe, we've backlog is FCD. and is had backlog positive Yes. quarter, And rational segment

in what that reduction QX we reduce shrinkage see that that traditionally that see in couple times, of to seen and that QX. it way And conversion we're a I'm with we going So over in terms really are, what pleased trying XXXX. we've avoid we about as of the to between course is QX hoping seen really of that the from QX the portfolio valves we've to of the and revenue said backlog I've

question, the Got of kind great, to I'm I super the like of great follow-up clearly, through it. dynamics remains kind as track. trying on margin guess, guess, my for of helpful expansion beyond right? what cost component. earnings cash That's cash impacting going free free forward cash adjusted component but means flow your think to the conversion, a to restructuring getting the of cost think you and And through, your XXXX. has then hear. other I out to the flow Because that's achieve clearly, there's been ultimately, that --

So beyond how XXXX? do that we about think

Sure.

in structurally mean, the in time. forecast reduce we're forward. at we obviously put to aware I put to the move as we've -- the this things in look that of We're So for continue we going opportunities to our point cost

that of of component million course fairly We've we've over taken that sizable for there although -- that, think this actually year, see some a restructuring taken that way around XXXX. continued I certainly, of is through, cash noncash. that's this And will occur the to we've of of that make some restructuring its year, $XX the the certainly, the outlays of will that

look XXXX to Or the are like is cost there that similar in achieve going size be to any like? of number XXXX? are -- to is a what going quantification is And to there

not that Joe. yet, have We quantified number

particular be those and I identified. think like assumption that forward, to that have but that's what to a make look initiatives it yet going rational might

We Brett Linzey next Mizuho. line of the to go with

on for This Costa Peter Linzey. Brett is

Middle really in geopolitical guys and growth Are any the throttling activity back Africa. current region East or seeing the emerging of risk future the in you impressive there's environment. So given

Sure. It's a watching very good closely. we're It's that question. something

in little geopolitics We with with so East a war Israel a We've the have lots and is today concern Middle bit And Palestine. got now Ukraine still of Russia. of right? wildcard, with

I'd watching. So conflict any say it's that drives we're just something uncertainty.

net a not And I'd so it's say positive.

Arabia, what's Qatar progress Saudi are that on the to have However, where forward. the those to given things remain of UAE, in the continue in visibility kind that confident we in going in and projects that we world,

our in I given the projections, the in an know international element of plans risk that we we're exposure watching confident our world. and But business, so there's And in that have. geopolitical significant again, we today, think given feel our always we everything in

just to of basis you results also of that noted forward? adjustments potentially point if impact moving adjusted long-term the move I'm noncash And then the liabilities. out curious XXX you'd that

consistent something how when we something been. about how we start year, of transparent to year-to-year adjusted of be it, And new -- we take we we what think number we terms that intend by certainly size obviously, in hope that not certainly a and have analysts. is those in be We've Obviously, presented charges But of things, it's we'll tried going consider going It's year a look to from forward. at we've avoid what this. to to these about as forward. this presented has each us been the

We go next Jones Stifel. to with Nathan

done There's pretty ask balance first it's I companies the those second the guess it. that Several my sheet. one. to last liabilities a well-defined seeing question a I'll getting off follow-up other for have playbook

you more to the bit the these balance have little don't off charges actually anymore. sheet, balance that what so about liability have in Now are that your worry sheet, thoughts about we moving flexibility a

something sheet. are that on So continue liability the our and There balance have talk internally. monitor certainly -- undiscounted we to it's is an liability about that we

that also offsets a We have it. receivable partially

size liability the about believe management the that market. look have Many transactions of So at it's net larger as around what's happened that the manageable. been we in liability been is executed million. $XX We have than much

but we've other date allocation, will as And higher this insurance So proceeds that against we're to currently, to and for uses allocation and that We about the return this. capital around think better has to capital team making able opportunities, viewed we long-term to it's under manage is this, our consideration. greatest the for to shareholders. that continue where been same net the our the decision given be liability way received legal

can. it that year make We'll decision best every the at look time at we and the

Okay.

large about these wanted into things projects to the is visibility number Second you're and question about stage. a EPC of backlogs I project talking Scott, and the FID moving on pipeline. the ask certain

to to get they on. backlogs, And I EPC always get going being is visibility they're projects executed so I here. think And that on. pretty pretty into they Flowserve's Flowserve mean much executed good be get much once to pretty awarded once

we think FID see are market market like are risk years assume The if X a they that that some turns in how to the If -- far we disruption we Is the year might the away turns is down. it see if that disruption now from might down? some haven't your we probably the out that away got about that projects that, ones ones more pipeline. are behind at

of maybe you your visibility executed on? that more into Just and can level that color pipeline get your around those give confidence some

you good said. of Sure. reiterate that a point, No, and kind some I'll of really think things I the that's Nathan,

we they're EPC know passed our showing near-term these backlog. with that? do FID, year if internal about, call got think and opportunities. And Why X just up within out. so We've have it our we pipeline We now own funnel let's have in projects the and orders confidence

stopped I'll goes get from historical you unless FID a will once EPCs, something a And rarely canceled project and or it you -- perspective, very dramatically just see once very, wrong. in the see you

so outlook. in projects X-year good And in larger our have very funnel we visibility terms of and

or some cost lever I in that be to we driven X-year start up of geopolitical could and earlier. of interest beyond which how projects rates some when project terms these some you referenced inflation or the they mark, would see financing uncertainty say the risks, of potentially by that's

security and though, we On substantial and got underinvestment. dynamic had in again, the energy on the also energy of side, constructive. that transition. market is side the oil And positive We've incredibly have we've gas pricing

similar a And at about Day, comments really the energy that feel good month world, my so the the Investor very ago we like long-term around to security activity dynamics view still of and transition. energy given of

conclude teleconference. does today's your for We this participation. you And thank

lines disconnect your may You this time. at