Flowserve Corp Q1 2025 Earnings Call Summary

The following is excerpted from the question-and-answer section of the transcript.

Question: Andy Kaplowitz - Citi - Analyst : Maybe you can -- Scott, maybe you can talk about the sustainability of bookings as you see it. Obviously, you said April look pretty good. Aftermarket was very strong. You didn't put in the book-to-bill over one. I'm just curious about how you see the second half. I think you mentioned the funnel some of your end markets. improve. So can that sort of offset any project deferrals you seem to continue to have relatively solid bookings, especially aftermarket, maybe $600 million, the new $500 million in aftermarket bookings.

Question: Andy Kaplowitz - Citi - Analyst : Very helpful. And then, Amy, just to the guidance on Q2, the sort of similar or modestly better EPS. Maybe you could talk a little bit more. You mentioned sort of mix could hurt incrementals a bit. Is there any sort of issue where tariffs ladder in before pricing or other countermeasures? Or sort of what's going on there? Because usually, seasonally, Q2 is a pretty decent step-up from Q1.

Question: Mike Halloran - Robert W. Baird - Analyst : Good morning, everyone. One of my thinking about this in terms of the footprint, the competitive footprint, the ability to push price. Two-fold question. One, how do you view your footprint relative to the peer group? It feels like everyone buys cast these fittings REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. APRIL 30, 2025 / 2:00PM, FLS.N - Q1 2025 Flowserve Corp Earnings Call overseas. So I don't know if there's really much difference there other than it seems like you're in a good position, but please would love your viewpoint there? And then also, how receptive has the market been to pricing as you sit here today?

Question: Mike Halloran - Robert W. Baird - Analyst : That's super helpful. Last one for me then. Just based on the comments, you seem very confident in the ability to manage margins in the backlog. So just maybe talk about the mechanics there, whether that's hedging, price change in orders, whatever it is and how that dynamic plays out.

Question: Deane Dray - RBC Capital Markets - Analyst : Would love to continue this topic, following up on Mike's question. So on pricing, just some of the nuances you parse between aftermarket versus OE. Just kind of talk about your pricing power between the two. Switching costs for a customer, demand elasticity, at what point would they walk away? And just because it sounds like you've moved early and you have the ability to reprice backlog, which is fabulous. But just some of the nuances here, aftermarket versus OE and demand elasticity.

Question: Deane Dray - RBC Capital Markets - Analyst : I appreciate all the precision in these pricing, the pricing strategy and how it's being implemented. And my follow-up question is more on the M&A side. Would love an update on Mogas integration, early read and what kind of contribution you're expecting?

Question: Nathan Jones - Stifel Nicolaus - Analyst : I guess, starting off with a question on the visibility into the project pipeline. I think typically, when you're booking project orders, those projects are fairly advanced. And so if you were to see a drop off in project orders. it probably does happen in the first quarter, it doesn't happen in the second quarter. It might not even happen in the third quarter of this year, but maybe a bit further out. Do you guys have visibility to those projects that might turn into orders for Flowserve of 6, 12, 18 months ahead? And is that where you would see project pushouts if they were to occur?

Question: Nathan Jones - Stifel Nicolaus - Analyst : Excellent. I guess second question on -- I guess this is on tariffs. You said $90 million to $100 million of gross unmitigated impact. Can you talk about what you intend to offset with price and what you intend to offset with other supply chain initiatives or manufacturing initiatives?

Question: Nathan Jones - Stifel Nicolaus - Analyst : And just a quick clarification. The timing being a bit mismatched would imply that there's a bit of margin pressure in the second quarter and a bit less in second half.

Question: David Ridley Lane - Bank of America - Analyst : This is David Ridley Lane on for Andrew Obin. Last quarter, you said that inventory positions at your distributors were at pretty normal levels. Wondering if you saw any prebuy activity from your distributors maybe ahead of the March price actions.

Question: David Ridley Lane - Bank of America - Analyst : Understood. And then do you see any need to add to your capacity as you are seeing these elevated nuclear orders continue? And maybe would you need to add to capacity on some of the more specialized LNG or power generation projects, which are?

Question: Joe Giordano - Cowen and Company - Analyst : So maybe I'll start. The 3D bookings, obviously, have a lot of momentum here. How do you square that with like some of the actions taken from a policy standpoint. I think recently, DOE is same like cutting something like $10 billion in funding for clean energy projects spanning carbon capture and hydrogen and some of the stuff that you've been doing very well and at customers that you serve. So how do you see that interplay?

Question: Joe Giordano - Cowen and Company - Analyst : And then the second question on -- just I want to understand what's embedded in the guidance from a macro standpoint. I know the slide deck says you're assuming that kind of general economic conditions stay largely the same. But at the same time, I guess, you're raising prices here. It seems like you built in somewhat of a contingency on volumes going down as a result of price because the organic growth is the same despite the higher price component. So like -- is it fair to say that if macro conditions really do stay the same and you're booking like [1.1], [1.2], like under normal circumstances you'd probably be raising now?