Flowserve Corporation Q2 FY2025 earnings call

• Chart Merger: Terminated merger with Chart Industries, received $266M termination payment; will deploy capital for shareholder value. - Second Quarter Results: Bookings ~$1.1B, revenue growth 3%, adjusted gross margin 34.9% (260 basis points increase), adjusted operating margin 14.6%. - Aftermarket: Fifth consecutive quarter of aftermarket bookings above $600M; nuclear bookings ~$60M, signed MOU with Honeywell for RedRaven integration. - Supply Chain: Tariff impact estimated $50M-$60M annually, goal is tariff impact neutral for full year; pricing actions in place with no demand impact. - Flowserve Business System: Operational excellence embedded, 80/20 across business units, launched Commercial Excellence.

FPD: Delivered solid bookings with growth in general industries but lower bookings than prior year due to nonrecurrence of large projects and pushouts. Sales grew 1% y-o-y. Adjusted gross margin was 36.8% (390 basis points increase), adjusted operating margin 20.3% (340 basis points increase). FCD: Bookings grew 2%, sales grew 7% (driven by Mogas acquisition). Mogas unfavorably impacted FCD adjusted operating margins by roughly 260 basis points. Organic FCD had gross margins up 180 basis points and operating income up 140 basis points y-o-y excluding Mogas.

• Increased full-year adjusted EPS guidance to $3.25-$3.40 (midpoint +25% y-o-y). - Expect book-to-bill ratio ~1.0x for full year. - Mogas expected to contribute ~$0.08 to full-year adjusted EPS. - Second half earnings expected higher than first half, with Q4 expected as highest earnings quarter.

• Trade Policy: Evolving trade policy impacts supply chain costs and project spending. - Mogas Integration: Initial margin dilution from Mogas, but synergy realization on track. - Macro Uncertainty: Impact on project timing and spending due to macro environment fluidity.

Q: Andy Kaplowitz asked about bookings environment and book-to-bill.

A: Robert Scott Rowe said market is uncertain, project funnel is up sequentially, expecting book-to-bill ~1.0x for full year.

Q: Deane Dray inquired about Chart merger and M&A.

A: Robert Scott Rowe and Amy Schwetz discussed M&A strategy, looking for transactions fitting diversification, decarbonization, digitization.

Q: Damian Karas asked about nuclear bookings and FCD margins.

A: Robert Scott Rowe said nuclear bookings are lumpy, FCD margin improvement expected via Flowserve Business System and technology.