Flowserve Q4 2025 Flowserve Corp Earnings Call | AllMind AI Earnings | AllMind AI
Q4 2025 Flowserve Corp Earnings Call
Speaker #1: Good day, and welcome to the Flowserve Q4 2025 earnings call. Today's call is being recorded. At this time, I'd like to turn the call over to Brian Ezzell, VP of Investor Relations.
Operator: Good day, and welcome to the Flowserve Corporation Q4 2025 earnings call. Today's call is being recorded. At this time, I'd like to turn the call over to Brian Ezell, VP of Investor Relations. Please go ahead.
Operator: Good day, and welcome to the Flowserve Corporation Q4 2025 earnings call. Today's call is being recorded. At this time, I'd like to turn the call over to Brian Ezell, VP of Investor Relations. Please go ahead.
Speaker #1: ahead. Thank you, and
Brian Ezzell: Thank you, and good morning, everyone. Welcome to Flowserve's Q4 and full year 2025 business update. I'm joined by Scott Rowe, Flowserve's President and Chief Executive Officer, and Flowserve's Chief Financial Officer, Amy Schwetz. Following Scott and Amy's prepared remarks, we'll open the call for questions. Turning to slide 2, our discussion will contain forward-looking statements that are based upon information available as of today. Actual results may differ due to risks and uncertainties. Refer to additional information, including our note on non-GAAP measures and our press release, earnings presentation, and SEC filings, which are available on our website. With that, I will turn it over to Scott.
Ryan Ezzell: Thank you, and good morning, everyone. Welcome to Flowserve's Q4 and full year 2025 business update. I'm joined by Scott Rowe, Flowserve's President and Chief Executive Officer, and Flowserve's Chief Financial Officer, Amy Schwetz. Following Scott and Amy's prepared remarks, we'll open the call for questions. Turning to slide 2, our discussion will contain forward-looking statements that are based upon information available as of today. Actual results may differ due to risks and uncertainties. Refer to additional information, including our note on non-GAAP measures and our press release, earnings presentation, and SEC filings, which are available on our website. With that, I will turn it over to Scott.
Speaker #2: fourth quarter and full year, 2025, good morning, everyone. Welcome to Flowserve's business update. I'm joined by Scott Rowe, Flowserve's President and Chief Executive Officer, and Flowserve's Chief Financial Officer, Amy Schwetz.
Speaker #2: Following Scott and Amy's prepared remarks, we'll open the call for questions. 2, our discussion will contain forward-looking Turning to Slide statements that are based upon information available as of today.
Speaker #2: Actual results may differ due to risks and uncertainties. Refer to additional information, including our note on non-GAAP measures and our press release, earnings presentation, and SEC filings, which are available on our website.
Scott Rowe: Thank you, Brian, and good morning, everyone. Before I turn to the presentation, I would like to thank our associates around the world for their hard work and dedication throughout 2025. We have made tremendous progress as a company, advancing our 3D strategy to drive growth and leveraging the internal processes of the Flowserve Business System to deliver results. Our associates embraced significant change in a complex macro environment, and I could not be more pleased with what we have accomplished as an organization. These efforts culminated in outstanding financial performance in 2025 and achievement of our long-term margin targets two years ahead of plan. Let's start on slide 3 with bookings. Bookings for the quarter were $1.2 billion, growing roughly 3% versus the prior year period.
R. Scott Rowe: Thank you, Brian, and good morning, everyone. Before I turn to the presentation, I would like to thank our associates around the world for their hard work and dedication throughout 2025. We have made tremendous progress as a company, advancing our 3D strategy to drive growth and leveraging the internal processes of the Flowserve Business System to deliver results. Our associates embraced significant change in a complex macro environment, and I could not be more pleased with what we have accomplished as an organization. These efforts culminated in outstanding financial performance in 2025 and achievement of our long-term margin targets two years ahead of plan. Let's start on slide 3 with bookings. Bookings for the quarter were $1.2 billion, growing roughly 3% versus the prior year period.
Speaker #3: Everyone, before I turn to the presentation, I, Scott, would like to thank our associates around the world for their hard work and dedication throughout 2025.
Speaker #3: We have made tremendous progress as a company, advancing our 3D strategy to drive growth and leveraging the internal processes of the Flowserve Business System to deliver results.
Speaker #3: Our associates embrace significant change and a complex macro environment, and I could not be more pleased with what we have accomplished as an organization.
Speaker #3: These efforts culminated in outstanding financial performance in 2025 and achievement of our long-term margin targets two years ahead of plan. Let's start on Slide 3 with bookings.
Speaker #3: Bookings for the quarter were $1.2 billion, growing roughly 3% versus the prior year period. Aftermarket bookings grew 10% to $682 million, representing the seventh consecutive quarter of bookings greater than $600 million.
Scott Rowe: Aftermarket bookings grew 10% to $682 million, representing the seventh consecutive quarter of bookings greater than $600 million. Project activity was steady in the quarter. We remain excited about the significant opportunities in nuclear and traditional power, with notable awards in these markets, in addition to broadly positive trends in most of the other end markets. Our largest booking in the quarter was a $28 million power award, and we delivered nearly $100 million in total nuclear bookings. Larger engineered projects in the energy end markets across both FPD and FCD remain muted, impacting original equipment bookings in the quarter. Our 3D diversification strategy has made Flowserve more cycle resilient than ever before, with consistent and durable bookings in diverse end markets that are supported by secular megatrends, offsetting temporary pockets of softness in more cyclical end markets.
R. Scott Rowe: Aftermarket bookings grew 10% to $682 million, representing the seventh consecutive quarter of bookings greater than $600 million. Project activity was steady in the quarter. We remain excited about the significant opportunities in nuclear and traditional power, with notable awards in these markets, in addition to broadly positive trends in most of the other end markets. Our largest booking in the quarter was a $28 million power award, and we delivered nearly $100 million in total nuclear bookings. Larger engineered projects in the energy end markets across both FPD and FCD remain muted, impacting original equipment bookings in the quarter. Our 3D diversification strategy has made Flowserve more cycle resilient than ever before, with consistent and durable bookings in diverse end markets that are supported by secular megatrends, offsetting temporary pockets of softness in more cyclical end markets.
Speaker #3: Project activity was steady in the quarter. We remain excited about the significant opportunities in nuclear and traditional power, with notable awards in these markets.
Speaker #3: In addition to broadly positive trends in most of the other markets, our largest booking in the quarter was a 28 million dollar power award, and we delivered nearly 100 million dollars in total engineered projects in the nuclear bookings.
Speaker #3: Energy markets across both FPD and FCD remained muted, impacting original equipment bookings in the quarter. Our 3D larger diversification strategy has made Flowserve more cycle-resilient than ever before.
Speaker #3: With consistent and durable bookings in diverse markets that are supported by secular megatrends, offsetting temporary pockets of softness in more cyclical markets, we have diversified our portfolio aftermarket opportunities.
Scott Rowe: We have diversified our portfolio mix, and we continue to expand our aftermarket opportunities while selectively focusing on high-margin engineered projects with strong aftermarket potential. Given our progress to date and positive momentum entering 2026, we are confident our strategic areas of focus will provide the opportunity to drive growth and deliver increasing shareholder value for years to come. I will now turn it over to Amy to review Q4 financial results in more detail.
R. Scott Rowe: We have diversified our portfolio mix, and we continue to expand our aftermarket opportunities while selectively focusing on high-margin engineered projects with strong aftermarket potential. Given our progress to date and positive momentum entering 2026, we are confident our strategic areas of focus will provide the opportunity to drive growth and deliver increasing shareholder value for years to come. I will now turn it over to Amy to review Q4 financial results in more detail.
Speaker #3: While selectively focusing on high margin engineered projects with strong aftermarket positive momentum entering 2026, we are confident our strategic areas of focus will provide the potential.
Speaker #3: opportunity to drive growth and deliver increasing shareholder value for years to come. Given our progress to date, I will now turn it over to Amy to review fourth quarter financial results in more detail.
Speaker #1: Thank you, Scott, and good morning. In more detail on Slide 4, our strong results reflect the continued effectiveness and resilience of the Flowserve business system, supported by excellent execution across our global teams.
Amy Schwetz: Thank you, Scott, and good morning, everyone. Turning to Q4 in more detail on slide 4, our strong results reflect the continued effectiveness and resilience of the Flowserve business system, supported by excellent execution across our global teams. Total revenues grew 4% year-over-year to $1.2 billion, with organic sales growth of roughly 1% and 240 basis points of benefit from foreign currency translation. Sales performance continued to benefit from our diversified portfolio and strong aftermarket activity. Aftermarket sales increased 8% in the quarter, partially offset by a 2% decline in original equipment revenues. OE revenues were lower than we anticipated coming into the quarter, largely due to customer delays and the timing of receiving materials on percentage of completion projects. We anticipate these modest short-term impacts will abate in the first half of 2026.
Amy Schwetz: Thank you, Scott, and good morning, everyone. Turning to Q4 in more detail on slide 4, our strong results reflect the continued effectiveness and resilience of the Flowserve business system, supported by excellent execution across our global teams. Total revenues grew 4% year-over-year to $1.2 billion, with organic sales growth of roughly 1% and 240 basis points of benefit from foreign currency translation. Sales performance continued to benefit from our diversified portfolio and strong aftermarket activity. Aftermarket sales increased 8% in the quarter, partially offset by a 2% decline in original equipment revenues. OE revenues were lower than we anticipated coming into the quarter, largely due to customer delays and the timing of receiving materials on percentage of completion projects. We anticipate these modest short-term impacts will abate in the first half of 2026.
Speaker #1: Total revenues grew 4% year over year to $1.2 billion, with organic sales growth of roughly 1%, and approximately 240 basis points of benefit from foreign currency translation.
Speaker #1: Sales performance continued to benefit from our aftermarket activity. Turning to the fourth quarter diversified portfolio and strong Aftermarket sales increased offset by a 2% decline 8% in the quarter, partially in original equipment revenues.
Speaker #1: OE revenues were lower than we anticipated, coming into the quarter, largely due to customer delays and on percentage of completion projects. We anticipate these first half of modest short-term impacts will abate in the 2026.
Amy Schwetz: Turning to profitability, adjusted gross margin reached 36%, a 320 basis point improvement versus last year, and our 12th consecutive quarter of year-over-year margin expansion. We continue to advance the operational excellence initiatives, 80/20 complexity reduction, and cost performance improvements, leading to a full-year incremental margin of 95%. With additional SG&A leverage, adjusted operating margin expanded 420 basis points to 16.8%, exceeding our 2027 long-term target range of 14% to 16%. These results drove adjusted EPS of $1.11, an impressive 59% increase compared to prior year. Moving to segment performance on slide 5. FPD delivered another quarter of strong margin expansion, with adjusted gross margin increasing 370 basis points to 37.1% and adjusted operating margin expanding 350 basis points to 21%.
Amy Schwetz: Turning to profitability, adjusted gross margin reached 36%, a 320 basis point improvement versus last year, and our 12th consecutive quarter of year-over-year margin expansion. We continue to advance the operational excellence initiatives, 80/20 complexity reduction, and cost performance improvements, leading to a full-year incremental margin of 95%. With additional SG&A leverage, adjusted operating margin expanded 420 basis points to 16.8%, exceeding our 2027 long-term target range of 14% to 16%. These results drove adjusted EPS of $1.11, an impressive 59% increase compared to prior year. Moving to segment performance on slide 5. FPD delivered another quarter of strong margin expansion, with adjusted gross margin increasing 370 basis points to 37.1% and adjusted operating margin expanding 350 basis points to 21%.
Speaker #1: profitability, adjusted gross margin reached 36%, a Turning to 320 basis point improvement versus last year, and our 12th consecutive quarter of year over year margin expansion.
Speaker #1: Operational excellence initiatives, 80/20 complexity reduction, and we continue to advance cost performance improvements, leading to a full-year incremental margin of 95%. With additional SG&A leverage and adjusted timing of receiving materials, operating margin expanded 420 basis points to 16.8%, exceeding our 2027 long-term target range of 14% to 16%.
Speaker #1: These results drove adjusted EPS of $1.11 and impressive 59% increase year. Moving to segment performance on Slide 5, compared to prior FPD delivered another quarter of strong margin expansion with adjusted gross margin increasing 370 basis points to 37.1% and adjusted operating margin expanding 350 21%.
Speaker #1: FPD bookings grew 8%, led by aftermarket growth of 12%. Aftermarket momentum continues, and we see substantial opportunity to capture more business from our basis points to base.
Amy Schwetz: FPD bookings grew 8%, led by aftermarket growth of 12%. Aftermarket momentum continues, and we see substantial opportunity to capture more business from our large installed base. Original equipment bookings were up a modest 1%, as large engineered project activity in the energy end market remained muted and offset growth in other areas. FPD's sales grew 5% to $833 million. The segment exited the year with a Q4 book-to-bill of 1.06, positioning FPD well for 2026. Moving to FCD, as expected, margin performance improved meaningfully compared to the prior year period, reflecting continued execution of the Flowserve Business System and solid contributions from Mogas. Adjusted gross margin expanded 220 basis points to 34%, and adjusted operating margin increased 440 basis points to 19.7%.
Amy Schwetz: FPD bookings grew 8%, led by aftermarket growth of 12%. Aftermarket momentum continues, and we see substantial opportunity to capture more business from our large installed base. Original equipment bookings were up a modest 1%, as large engineered project activity in the energy end market remained muted and offset growth in other areas. FPD's sales grew 5% to $833 million. The segment exited the year with a Q4 book-to-bill of 1.06, positioning FPD well for 2026. Moving to FCD, as expected, margin performance improved meaningfully compared to the prior year period, reflecting continued execution of the Flowserve Business System and solid contributions from Mogas. Adjusted gross margin expanded 220 basis points to 34%, and adjusted operating margin increased 440 basis points to 19.7%.
Speaker #1: Large installed Original Equipment bookings were up a modest 1%, as large engineered project activity in the energy market remained muted and offset growth in other areas. FPD sales grew 5% to $833 million.
Speaker #1: The segment exited the year with a Q4 book-to-bill of 1.06, positioning FPD well for 2026. Moving to FCD, as expected, margin performance improved meaningfully compared to the prior-year period.
Speaker #1: Reflecting continued execution of the Flowserve of business system, and solid contributions from MOGUS. Adjusted gross margin expanded 220 basis points to 34%, and adjusted 440 basis points to operating margins for the quarter, consistent with our expectations at acquisition.
Amy Schwetz: Mogas delivered accretive operating margins for the quarter, consistent with our expectations at acquisition. Turning to bookings. Although growth remains a priority for FCD, margin improvement has been the segment's primary focus. For the quarter, FCD bookings declined, driven by headwinds from our continued focus on the 80/20 program and lower original equipment awards from project delays. Aftermarket bookings were roughly flat year-over-year. FCD's book-to-bill for the quarter was 0.84, with overall strength in the power end market, reflecting our industry-leading position. Overall, both FPD and FCD posted adjusted operating margins well above our 2027 segment target ranges of 16% to 18%, reinforcing that operational excellence and 80/20 discipline are firmly embedded across our global operations.
Amy Schwetz: Mogas delivered accretive operating margins for the quarter, consistent with our expectations at acquisition. Turning to bookings. Although growth remains a priority for FCD, margin improvement has been the segment's primary focus. For the quarter, FCD bookings declined, driven by headwinds from our continued focus on the 80/20 program and lower original equipment awards from project delays. Aftermarket bookings were roughly flat year-over-year. FCD's book-to-bill for the quarter was 0.84, with overall strength in the power end market, reflecting our industry-leading position. Overall, both FPD and FCD posted adjusted operating margins well above our 2027 segment target ranges of 16% to 18%, reinforcing that operational excellence and 80/20 discipline are firmly embedded across our global operations.
Speaker #1: Turning to bookings, although growth 19.7%. MOGUS delivered a creative remains a priority for FCD, margin improvement has been the segment's primary focus. For the quarter, FCD bookings declined, driven by headwinds from our continued focus on the 80/20 program and lower original equipment awards from project delays.
Speaker #1: Aftermarket bookings were roughly flat year over year. FCD's book-to-bill for the quarter was 0.84, with overall strength in the power market, reflecting our industry-leading position.
Speaker #1: Overall, both FPD and FCD posted adjusted operating margins well above our 2027 segment target ranges of 16 to 18%. Reinforcing that operational excellence and 80/20 discipline are firmly embedded across our global operations.
Speaker #1: On Slide 6, excluding asbestos liabilities, we generated $199 million of cash from operations in the fourth quarter, delivering the impact of divesting our legacy—121% free cash flow conversion.
Amy Schwetz: On Slide 6, excluding the impact of divesting our legacy asbestos liabilities, we generated $199 million of cash from operations in the fourth quarter, delivering 121% free cash flow conversion. This strong performance was driven primarily by growth in adjusted net income and continued working capital management under the Flowserve Business System. During the quarter, we returned $84 million in cash to shareholders, including $57 million in share repurchases. Looking at the full year, we delivered an outstanding $506 million in operating cash flow, a 19% increase versus 2024. Adjusting to exclude the net impact of the merger termination payment and asbestos divestiture, full-year cash flow conversion was 97%.
Amy Schwetz: On Slide 6, excluding the impact of divesting our legacy asbestos liabilities, we generated $199 million of cash from operations in the fourth quarter, delivering 121% free cash flow conversion. This strong performance was driven primarily by growth in adjusted net income and continued working capital management under the Flowserve Business System. During the quarter, we returned $84 million in cash to shareholders, including $57 million in share repurchases. Looking at the full year, we delivered an outstanding $506 million in operating cash flow, a 19% increase versus 2024. Adjusting to exclude the net impact of the merger termination payment and asbestos divestiture, full-year cash flow conversion was 97%.
Speaker #1: This strong performance was driven primarily by growth in adjusted net income and continued working capital management under the Flowserve business system. During the quarter, we returned 84 million dollars in cash to shareholders, including 57 million dollars in share repurchases.
Speaker #1: Looking at the full year, we delivered an outstanding 506 million dollars in operating cash flow, a 19% increase versus 2024. Adjusting to exclude the net impact of the merger termination payment and asbestos divestiture, full year cash flow conversion was 97%.
Speaker #1: For the year, we returned 365 million dollars to shareholders, including 255 million average price of $53 per share. We have an dollars in share repurchases at an additional 200 million dollars remaining on our share repurchase authorization.
Amy Schwetz: For the year, we returned $365 million to shareholders, including $255 million in share repurchases at an average price of $53 per share. We have an additional $200 million remaining on our share repurchase authorization. Our balance sheet remains healthy, with net leverage of 1x, providing flexibility for allocating capital towards strategic growth opportunities. I'll now turn it back to Scott to provide some context on the full year and our 2026 outlook.
Amy Schwetz: For the year, we returned $365 million to shareholders, including $255 million in share repurchases at an average price of $53 per share. We have an additional $200 million remaining on our share repurchase authorization. Our balance sheet remains healthy, with net leverage of 1x, providing flexibility for allocating capital towards strategic growth opportunities. I'll now turn it back to Scott to provide some context on the full year and our 2026 outlook.
Speaker #1: Our balance sheet remains healthy, with net leverage of one time, providing flexibility for allocating capital towards strategic growth opportunities. I'll now turn it back to Scott Year and our 2026 outlook.
Speaker #2: Thanks, Amy.
Scott Rowe: Thanks, Amy. Turning now to Slide 7. We delivered outstanding results in 2025, including 300 basis points of expansion in adjusted operating margins, significant adjusted EPS growth of 38%, and strong operating cash flow for the full year. The persistent strength of our aftermarket business resulted in $2.6 billion of bookings in 2025, representing 9% year-over-year growth. Our 2025 book-to-bill ratio was in line with expectations at 1.0 times, and we closed the year with a backlog of $2.9 billion. I'm incredibly proud of our progress with the Flowserve Business System. We are driving improved process and standardization across the enterprise. We are seeing exceptional results with operational excellence as we drive strategy deployment, perform daily operations management, optimize our materials management, and conduct real-time problem-solving on the shop floor.
R. Scott Rowe: Thanks, Amy. Turning now to Slide 7. We delivered outstanding results in 2025, including 300 basis points of expansion in adjusted operating margins, significant adjusted EPS growth of 38%, and strong operating cash flow for the full year. The persistent strength of our aftermarket business resulted in $2.6 billion of bookings in 2025, representing 9% year-over-year growth. Our 2025 book-to-bill ratio was in line with expectations at 1.0 times, and we closed the year with a backlog of $2.9 billion. I'm incredibly proud of our progress with the Flowserve Business System. We are driving improved process and standardization across the enterprise. We are seeing exceptional results with operational excellence as we drive strategy deployment, perform daily operations management, optimize our materials management, and conduct real-time problem-solving on the shop floor.
Speaker #2: Turning now to Slide 7, we delivered outstanding results in outlook 2025, including 300 basis points of expansion in adjusted operating margins, significant adjusted EPS growth of 38%, and strong operating cash flow for the full year.
Speaker #2: The persistent strength of our aftermarket
Speaker #2: business resulted in 2.6 billion dollars of bookings in 2025, representing 9% year over year growth. Our 2025 book-to-bill ratio was in line with to provide some context on the full expectations, at 1.0 times, and we closed the year with a backlog of 2.9 billion dollars.
Speaker #2: Progress with the Flowserve Business System. I'm incredibly proud of our—we are driving improved process and standardization across the enterprise. We are seeing exceptional results with operational excellence as we drive strategy deployment, perform daily our materials management and operations management, and optimize—conduct real-time problem-solving on the shop floor.
Speaker #2: We see continued opportunities as we advance these principles to further improve our response to customers, deliver improved stakeholders. Our financials, and increase value for all portfolio excellence pillar is on track with all product business units having embedded 80/20 methodology and process into our product operations.
Scott Rowe: We see continued opportunities as we advance these principles to further improve our response to customers, deliver improved financials, and increase value for all stakeholders. Our portfolio excellence pillar is on track with all product business units having embedded 80/20 methodology and process into our product strategy and our daily operations. The cultural transformation we have undertaken is impressive, and I'm confident that we have further opportunities to reduce complexity and simplify our operations for years to come. While our commercial excellence initiative is in the early phases of implementation, we are seeing wins with the program and are gaining confidence through our early projects that the visibility and processes we are putting in place will drive sustainable growth.
R. Scott Rowe: We see continued opportunities as we advance these principles to further improve our response to customers, deliver improved financials, and increase value for all stakeholders. Our portfolio excellence pillar is on track with all product business units having embedded 80/20 methodology and process into our product strategy and our daily operations. The cultural transformation we have undertaken is impressive, and I'm confident that we have further opportunities to reduce complexity and simplify our operations for years to come. While our commercial excellence initiative is in the early phases of implementation, we are seeing wins with the program and are gaining confidence through our early projects that the visibility and processes we are putting in place will drive sustainable growth.
Speaker #2: The cultural transformation we have undertaken is impressive, and I'm confident that we have further opportunities to reduce complexity and simplify strategy and our daily our operations for years to come.
Speaker #2: While our commercial excellence initiative is in the early phases of implementation, we are seeing wins with the program and are gaining confidence through our early projects that the visibility and processes we are putting in place will drive sustainable growth.
Speaker #2: Since the COVID pandemic, we have spent years building a more resilient supply chain that enabled us to quickly respond to shifts in evolving market broader macroeconomic landscape conditions and the throughout 2025.
Scott Rowe: Since the COVID pandemic, we have spent years building a more resilient supply chain that enabled us to quickly respond to shifts in evolving market conditions and the broader macroeconomic landscape throughout 2025. In response to tariffs, we successfully shifted sourcing and implemented pricing actions that allowed us to fully mitigate the tariff impact while maintaining a high level of service to our customers. We delivered $4.7 billion in bookings for the year, including $400 million in nuclear awards. Our 4 largest awards during the year were all global nuclear projects, combining to a total of over $150 million, highlighting our strong market position and key customer relationships in this exciting end market.
R. Scott Rowe: Since the COVID pandemic, we have spent years building a more resilient supply chain that enabled us to quickly respond to shifts in evolving market conditions and the broader macroeconomic landscape throughout 2025. In response to tariffs, we successfully shifted sourcing and implemented pricing actions that allowed us to fully mitigate the tariff impact while maintaining a high level of service to our customers. We delivered $4.7 billion in bookings for the year, including $400 million in nuclear awards. Our 4 largest awards during the year were all global nuclear projects, combining to a total of over $150 million, highlighting our strong market position and key customer relationships in this exciting end market.
Speaker #2: In response to tariffs, we successfully shifted sourcing and implemented pricing actions that allowed us to fully mitigate the tariff impact while maintaining a high level of service to our customers.
Speaker #2: We delivered 4.7 billion dollars in bookings for the year, including 400 million dollars in nuclear awards. Our four largest awards during the year were all global nuclear projects, combining to a total of over 150 million position and key customer relationships in this exciting end partnerships during the year, including market.
Scott Rowe: We also entered several strategic commercial partnerships during the year, including an MOU with Honeywell to integrate our Red Raven digital offering into their Forge Asset Performance Management system. This partnership will be instrumental in validating our innovative digital technology and its ability to enhance efficiency for our customers, allowing us to scale our offering for large industrial facilities over time. As Amy mentioned, the year was marked by disciplined capital allocation and a significant increase in cash return to shareholders, supported by improved cash flow generation and the $266 million merger termination payment. We believe our strong execution and positive operational momentum provide the framework for continuing to deliver enhanced shareholder value in 2026 and beyond. Turning to Slide 8.
R. Scott Rowe: We also entered several strategic commercial partnerships during the year, including an MOU with Honeywell to integrate our Red Raven digital offering into their Forge Asset Performance Management system. This partnership will be instrumental in validating our innovative digital technology and its ability to enhance efficiency for our customers, allowing us to scale our offering for large industrial facilities over time. As Amy mentioned, the year was marked by disciplined capital allocation and a significant increase in cash return to shareholders, supported by improved cash flow generation and the $266 million merger termination payment. We believe our strong execution and positive operational momentum provide the framework for continuing to deliver enhanced shareholder value in 2026 and beyond. Turning to Slide 8.
Speaker #2: entered several strategic commercial our Red Raven digital offering into their forge asset performance management system. This partnership will be an MOU with Honeywell to integrate instrumental in validating our We also innovative digital technology and its ability to enhance efficiency for our customers, allowing us to scale our offering for large industrial facilities over the year was marked by disciplined capital time.
Speaker #2: As Amy mentioned, in cash return to shareholders, supported by improved cash flow allocation and a significant increase generation and the 266 million dollar merger termination payment.
Speaker #2: We believe our strong execution and positive operational momentum provide the framework for continuing to deliver enhanced shareholder value in 2026 and beyond. Turning to Slide 8, the Flowserve Business System has transformed our company, and the successful integration of MOGUS onto the business system has proven that this is an effective model for integrating acquisitions.
Scott Rowe: The Flowserve Business System has transformed our company, and the successful integration of Mogas onto the business system has proven that this is an effective model for integrating acquisitions. The realization of cost synergies from the Mogas acquisition contributed to progressive margin improvement throughout the year. Mogas is now accretive to FCD margins, and we believe we are in a position to drive growth and further margin expansion by leveraging all aspects of the Flowserve Business System. Turning to Slide 9, we continue to see M&A as an important element of our disciplined capital allocation strategy and an attractive way to increase shareholder value by growing the business, diversifying our end markets, and expanding our margins. We announced an aftermarket-focused bolt-on acquisition in December that fits our services and solutions model, and over time, we believe it is highly scalable across the global Flowserve QRC network.
R. Scott Rowe: The Flowserve Business System has transformed our company, and the successful integration of Mogas onto the business system has proven that this is an effective model for integrating acquisitions. The realization of cost synergies from the Mogas acquisition contributed to progressive margin improvement throughout the year. Mogas is now accretive to FCD margins, and we believe we are in a position to drive growth and further margin expansion by leveraging all aspects of the Flowserve Business System. Turning to Slide 9, we continue to see M&A as an important element of our disciplined capital allocation strategy and an attractive way to increase shareholder value by growing the business, diversifying our end markets, and expanding our margins. We announced an aftermarket-focused bolt-on acquisition in December that fits our services and solutions model, and over time, we believe it is highly scalable across the global Flowserve QRC network.
Speaker #2: The realization of cost synergies from the MOGUS acquisition contributed to progressive margin improvement throughout the year. MOGUS is now accretive to FCD margins, and we believe we are in a position to drive growth and further margin expansion by leveraging all aspects of the Flowserve business system.
Speaker #2: Turning to Slide 9, we continue to see M&A as an important element of our disciplined capital allocation strategy, and an attractive way to increase shareholder value by growing the business, diversifying our end markets, and expanding our margins.
Speaker #2: We announced an aftermarket-focused bolt-on acquisition in December. That model, and over time we believe, fits our services and solutions—highly scalable across the global Flowserve QRC network.
Speaker #2: We also announced yesterday that Flowserve has signed a definitive agreement to acquire the Valve and Actuation business from Trillium Flow Technologies. Trillium Valve serves the nuclear, traditional power, industrial, and infrastructure sectors through an offering of market-leading mission-critical valves and actuators.
Scott Rowe: We also announced yesterday that Flowserve has signed a definitive agreement to acquire the valve and actuation business from Trillium Flow Technologies. Trillium Valves serves the nuclear, traditional power, industrial, and infrastructure sectors through an offering of market-leading, mission-critical valves and actuators. This strategic acquisition strengthens our valve and actuation portfolio and expands our global reach in attractive end markets like nuclear. Trillium has an extensive installed base of over 200,000 units, including assets in 115 operating nuclear reactors, bringing significant recurring demand for high-margin aftermarket services and parts. This acquisition also increases our available content for new nuclear reactors. We shared last quarter that a large new reactor could represent $100 million of content opportunity for Flowserve, and the expanded Trillium Valves offering could increase that amount by 15% to 20%.
R. Scott Rowe: We also announced yesterday that Flowserve has signed a definitive agreement to acquire the valve and actuation business from Trillium Flow Technologies. Trillium Valves serves the nuclear, traditional power, industrial, and infrastructure sectors through an offering of market-leading, mission-critical valves and actuators. This strategic acquisition strengthens our valve and actuation portfolio and expands our global reach in attractive end markets like nuclear. Trillium has an extensive installed base of over 200,000 units, including assets in 115 operating nuclear reactors, bringing significant recurring demand for high-margin aftermarket services and parts. This acquisition also increases our available content for new nuclear reactors. We shared last quarter that a large new reactor could represent $100 million of content opportunity for Flowserve, and the expanded Trillium Valves offering could increase that amount by 15% to 20%.
Speaker #2: This strategic acquisition strengthens our Valve and Actuation portfolio and expands our global reach in attractive end markets like nuclear. Trillium has an extensive installed base of over 200,000 units, including assets in 115 operating nuclear reactors bringing significant recurring demand for high-margin aftermarket services and parts.
Speaker #2: This acquisition also increases our available content for new nuclear reactors. We shared last quarter that a large new reactor could represent $100 million of content opportunity for Flowserve, and the expanded Trillium Valves offering could increase that amount by 15 to 20 percent.
Speaker #2: By replicating the successful playbook that we used with MOGUS, we expect to leverage all aspects of the Flowserve Business System to increase Trillium's margins and grow the business over time.
Scott Rowe: By replicating the successful playbook that we used with Mogas, we expect to leverage all aspects of the Flowserve Business System to increase Trillium's margins and grow the business over time. Turning to Slide 10, I'll provide some context about the operating landscape as we move into 2026. Our end markets have stable, positive trends with the potential for outsized growth in the traditional power and nuclear segments. The general industries end market is benefiting from sustained industrial expansion, notably in mining, pharmaceuticals, and water, particularly in North America and the Middle East. Within the energy end market, elevated utilization rates and maintenance activities for large process industries have remained robust. Our large installed base and our ability to drive a higher capture rate is delivering growth in this sector, even as some project work has been slow to materialize.
R. Scott Rowe: By replicating the successful playbook that we used with Mogas, we expect to leverage all aspects of the Flowserve Business System to increase Trillium's margins and grow the business over time. Turning to Slide 10, I'll provide some context about the operating landscape as we move into 2026. Our end markets have stable, positive trends with the potential for outsized growth in the traditional power and nuclear segments. The general industries end market is benefiting from sustained industrial expansion, notably in mining, pharmaceuticals, and water, particularly in North America and the Middle East. Within the energy end market, elevated utilization rates and maintenance activities for large process industries have remained robust. Our large installed base and our ability to drive a higher capture rate is delivering growth in this sector, even as some project work has been slow to materialize.
Speaker #2: Turning to Slide 10, I'll provide some context about the operating landscape as we move into 2026. Our end markets have stable, positive trends with the potential for outsized growth in the traditional power and nuclear segments.
Speaker #2: The general industry's end market is benefiting from sustained industrial expansion, notably in mining, pharmaceuticals, and water, particularly in North America and the Middle East.
Speaker #2: Within the energy end market, elevated utilization rates and maintenance activities for large process industries have remained robust. Our large installed base and our ability to drive a higher capture rate is delivering growth in this sector even as some project work has been slow to materialize.
Speaker #2: The chemical sector continues to represent our lowest growth end market; however, following a period of stabilization in 2025, we remain cautiously optimistic for a moderate recovery and an improved outlook in 2026.
Scott Rowe: The chemical sector continues to represent our lowest growth end market. However, following a period of stabilization in 2025, we remain cautiously optimistic for a moderate recovery and an improved outlook in 2026. Our 12-month forward-looking project funnel remains healthy. All end markets show growth, both sequentially and versus the prior year. In 2026, we expect bookings to grow mid-single digits, assuming a generally consistent macroeconomic environment. Turning to Slide 11, I'll highlight a few key areas of opportunity in our strategy and the Flowserve Business System that support our efforts to deliver continued growth and value creation. First, our growth strategy continues to be aligned to the key global megatrends with significant investment in energy security, regionalization, and electrification. As we highlighted last quarter, we are laser-focused on the growth opportunity in nuclear.
R. Scott Rowe: The chemical sector continues to represent our lowest growth end market. However, following a period of stabilization in 2025, we remain cautiously optimistic for a moderate recovery and an improved outlook in 2026. Our 12-month forward-looking project funnel remains healthy. All end markets show growth, both sequentially and versus the prior year. In 2026, we expect bookings to grow mid-single digits, assuming a generally consistent macroeconomic environment. Turning to Slide 11, I'll highlight a few key areas of opportunity in our strategy and the Flowserve Business System that support our efforts to deliver continued growth and value creation. First, our growth strategy continues to be aligned to the key global megatrends with significant investment in energy security, regionalization, and electrification. As we highlighted last quarter, we are laser-focused on the growth opportunity in nuclear.
Speaker #2: Our 12-month forward-looking project funnel remains healthy. All end markets show growth, both sequentially and versus the prior year. In 2026, we expect bookings to grow mid-single digits, assuming a generally consistent macroeconomic environment.
Speaker #2: Turning to slide 11, I'll highlight a few key areas of opportunity in our strategy and the Flowserve business system that support our efforts to deliver continued growth and value creation.
Speaker #2: First, our growth strategy continues to be aligned to the key global megatrends with significant investment in energy security, regionalization, and electrification. As we highlighted last quarter, we are laser-focused on the growth opportunity in nuclear.
Speaker #2: Flowserve is uniquely positioned as a global leader in nuclear flow control, supported by specialized product offerings, established customer relationships and approvals, as well as deep domain expertise.
Scott Rowe: Flowserve is uniquely positioned as a global leader in nuclear flow control, supported by specialized product offerings, established customer relationships, and approvals, as well as deep domain expertise, which is now further enhanced with the addition of Trillium Valves. Over the next 5 to 10 years, nuclear energy is projected to become an increasingly integral component of our business, with the potential to accelerate our bookings growth above our long-term targeted growth rates. Additionally, we expect to see continued progress with the business system as commercial excellence delivers deliberate and sustainable growth. The strong progress in operational excellence and 80/20 is reducing overall complexity and freeing up capacity within our manufacturing footprint, allowing for the potential of further manufacturing consolidation. We will continue to redeploy resources to drive growth in our best products and deliver differentiated solutions for our customers.
R. Scott Rowe: Flowserve is uniquely positioned as a global leader in nuclear flow control, supported by specialized product offerings, established customer relationships, and approvals, as well as deep domain expertise, which is now further enhanced with the addition of Trillium Valves. Over the next 5 to 10 years, nuclear energy is projected to become an increasingly integral component of our business, with the potential to accelerate our bookings growth above our long-term targeted growth rates. Additionally, we expect to see continued progress with the business system as commercial excellence delivers deliberate and sustainable growth. The strong progress in operational excellence and 80/20 is reducing overall complexity and freeing up capacity within our manufacturing footprint, allowing for the potential of further manufacturing consolidation. We will continue to redeploy resources to drive growth in our best products and deliver differentiated solutions for our customers.
Speaker #2: Which is now further enhanced with the addition of Trillium Valves. Over the next 5 to 10 years, nuclear energy is projected to become an increasingly integral component of our business, with the potential to accelerate our bookings growth above our long-term targeted growth rates.
Speaker #2: Additionally, we expect to see continued progress with the business system and sustainable growth. The strong progress in operational excellence and 80/20 is reducing overall complexity and freeing up capacity within our manufacturing footprint, allowing for the potential of further manufacturing consolidation.
Speaker #2: We will continue to redeploy resources to drive growth in our best products and deliver differentiated solutions for our customers. Finally, we believe that M&A can continue to play an important role in our long-term growth strategy, given our healthy balance sheet and proven ability to leverage the Flowserve business system for integration.
Scott Rowe: Finally, we believe that M&A can continue to play an important role in our long-term growth strategy, given our healthy balance sheet and proven ability to leverage the Flowserve Business System for integration. We will maintain a disciplined eye towards inorganic opportunities that build on Flowserve's current capabilities and create long-term value for our shareholders. With this backdrop, I'll now hand it over to Amy to discuss our 2026 guidance and updated long-term financial targets.
R. Scott Rowe: Finally, we believe that M&A can continue to play an important role in our long-term growth strategy, given our healthy balance sheet and proven ability to leverage the Flowserve Business System for integration. We will maintain a disciplined eye towards inorganic opportunities that build on Flowserve's current capabilities and create long-term value for our shareholders. With this backdrop, I'll now hand it over to Amy to discuss our 2026 guidance and updated long-term financial targets.
Speaker #2: We will maintain a disciplined eye toward inorganic opportunities that build on Flowserve's current capabilities and create long-term value for our shareholders. With this backdrop, I'll now hand it over to Amy to discuss our 2026 guidance and updated long-term financial targets.
Speaker #2: Thanks, Scott. Turning to our 2026 outlook on Slide 12, we are well-positioned to deliver another year of profitable growth. We expect total reported sales growth of 5 to 7 percent, with organic sales growth of 1 percent to 3 percent, reflecting a healthy backlog support of end markets, advancement of our 80/20 initiative, and gradually increasing contributions from our commercial excellence efforts.
Amy Schwetz: ... Thanks, Scott. Turning to our 2026 outlook on slide 12, we are well positioned to deliver another year of profitable growth. We expect total reported sales growth of 5% to 7%, with organic sales growth of 1% to 3%, reflecting a healthy backlog, supportive end markets, advancement of our 80/20 initiative, and gradually increasing contributions from our commercial excellence efforts. Reported sales are expected to benefit 100 basis points from favorable foreign currency translation and roughly 300 basis points of benefit from the Greenray and Trillium Valves acquisitions. We have assumed the Trillium Valves acquisition closes mid-year and anticipate refining this estimate later in the year based on the final closing date. Turning to profitability, we expect continued growth in operating margin expansion from higher sales and further cost reductions through 80/20 portfolio refinement.
Amy Schwetz: Thanks, Scott. Turning to our 2026 outlook on slide 12, we are well positioned to deliver another year of profitable growth. We expect total reported sales growth of 5% to 7%, with organic sales growth of 1% to 3%, reflecting a healthy backlog, supportive end markets, advancement of our 80/20 initiative, and gradually increasing contributions from our commercial excellence efforts. Reported sales are expected to benefit 100 basis points from favorable foreign currency translation and roughly 300 basis points of benefit from the Greenray and Trillium Valves acquisitions. We have assumed the Trillium Valves acquisition closes mid-year and anticipate refining this estimate later in the year based on the final closing date. Turning to profitability, we expect continued growth in operating margin expansion from higher sales and further cost reductions through 80/20 portfolio refinement.
Speaker #2: Reported sales are expected to benefit 100 basis points from favorable foreign currency translation and roughly 300 basis points of benefit from the Green Ray and Trillium Valves acquisitions.
Speaker #2: We have assumed the Trillium Valves acquisition closes mid-year and anticipate refining this estimate later in the year based on the final closing date. Turning to profitability, we expect continued growth in operating margin expansion from higher sales and further cost reductions through 80/20 portfolio refinement.
Speaker #2: Assuming a mid-year close, we anticipate Trillium will benefit adjusted operating income and be neutral to adjusted EPS, given incremental financing costs. Overall, adjusted operating margin is expected to expand approximately 100 basis points for the full year.
Amy Schwetz: Assuming a mid-year close, we anticipate Trillium will benefit adjusted operating income and be neutral to adjusted EPS, given incremental financing costs. Overall, adjusted operating margin is expected to expand approximately 100 basis points for the full year. We expect adjusted earnings per share of $4 to $4.20, representing a midpoint increase of 13% versus 2025. Our guidance assumes an adjusted tax rate of 21% to 22%. We anticipate the quarterly revenue and earnings cadence to follow historical seasonality, with Q1 revenue and earnings being the lowest of the year. Original equipment bookings are expected to accelerate in the second half of the year, largely driven by increased activity in the Middle East and escalating nuclear investments, and we remain confident in continuing to expand our already healthy aftermarket capture.
Amy Schwetz: Assuming a mid-year close, we anticipate Trillium will benefit adjusted operating income and be neutral to adjusted EPS, given incremental financing costs. Overall, adjusted operating margin is expected to expand approximately 100 basis points for the full year. We expect adjusted earnings per share of $4 to $4.20, representing a midpoint increase of 13% versus 2025. Our guidance assumes an adjusted tax rate of 21% to 22%. We anticipate the quarterly revenue and earnings cadence to follow historical seasonality, with Q1 revenue and earnings being the lowest of the year. Original equipment bookings are expected to accelerate in the second half of the year, largely driven by increased activity in the Middle East and escalating nuclear investments, and we remain confident in continuing to expand our already healthy aftermarket capture.
Speaker #2: We expect adjusted earnings per share of $4.00 to $4.20, representing a midpoint increase of 13 percent versus 2025. Our guidance assumes an adjusted percent.
Speaker #2: tax rate of 21 to 22 We anticipate the quarterly revenue and earnings cadence to follow historical seasonality, with first-quarter revenue and earnings being the lowest of the year.
Speaker #2: Original equipment bookings are expected to accelerate in the second half of the year, largely driven by increased activity in the Middle East and escalating nuclear investments, and we remain confident in continuing to expand our already healthy aftermarket capture.
Speaker #2: First-half revenues will be impacted by ongoing headwinds from 80/20 and the backlog composition. As we enter 2026, we anticipate converting roughly 76 percent of our existing backlog into revenue in the next 12 months.
Amy Schwetz: First half revenues will be impacted by ongoing headwinds from 80/20 and the backlog composition. As we enter 2026, we anticipate converting roughly 76% of our existing backlog into revenue in the next 12 months, a conversion factor lower than in recent years, given an increasing mix of longer-tenure nuclear projects and reduced OE energy projects. All in, first half earnings are expected to represent roughly 40% of full-year earnings. Turning to slide 13. Our consistent, disciplined approach to capital allocation continues to deliver value for shareholders. In 2025, we returned $365 million to shareholders through dividends and share repurchases, completed the acquisition of Greenray to strengthen our aftermarket capabilities, and divested legacy asbestos liabilities, all while improving our leverage levels.
Amy Schwetz: First half revenues will be impacted by ongoing headwinds from 80/20 and the backlog composition. As we enter 2026, we anticipate converting roughly 76% of our existing backlog into revenue in the next 12 months, a conversion factor lower than in recent years, given an increasing mix of longer-tenure nuclear projects and reduced OE energy projects. All in, first half earnings are expected to represent roughly 40% of full-year earnings. Turning to slide 13. Our consistent, disciplined approach to capital allocation continues to deliver value for shareholders. In 2025, we returned $365 million to shareholders through dividends and share repurchases, completed the acquisition of Greenray to strengthen our aftermarket capabilities, and divested legacy asbestos liabilities, all while improving our leverage levels.
Speaker #2: A conversion factor lower than recent years given an increasing mix of longer 10-year nuclear projects and reduced OE energy projects. All in, first-half roughly 40 percent of full-year earnings.
Speaker #2: Turning to Slide 13, our consistent disciplined approach to capital allocation continues to deliver earnings are expected to represent value for shareholders. In 2025, we returned $365 million to shareholders through dividends and share repurchases, completed the acquisition of green ray to strengthen our aftermarket capabilities, and divested legacy asbestos liabilities.
Speaker #2: All while improving our leverage levels. Moving into 2026, we remain focused on strategically deploying capital towards growth-enhancing opportunities, while staying committed to maintaining our investment-grade rating.
Amy Schwetz: Moving into 2026, we remain focused on strategically deploying capital towards growth-enhancing opportunities while staying committed to maintaining our investment grade rating. In 2026, capital expenditure investments to drive organic growth and efficiency in our operations are expected to be $90 million to 100 million, and we anticipate, at a minimum, repurchasing shares to offset equity dilution. Turning to slide 14, I'm extremely proud of the progress we've made against our 2027 financial targets since establishing them in mid-2023. Though the macro environment has presented unforeseen challenges, we remain firmly on track to deliver our sales and adjusted EPS goals. We have also delivered exceptional margin expansion since launching the Flowserve Business System. Over the past 2 years, adjusted operating margins have improved by 530 basis points, and we reached our 2027 margin target 2 years ahead of schedule.
Amy Schwetz: Moving into 2026, we remain focused on strategically deploying capital towards growth-enhancing opportunities while staying committed to maintaining our investment grade rating. In 2026, capital expenditure investments to drive organic growth and efficiency in our operations are expected to be $90 million to 100 million, and we anticipate, at a minimum, repurchasing shares to offset equity dilution. Turning to slide 14, I'm extremely proud of the progress we've made against our 2027 financial targets since establishing them in mid-2023. Though the macro environment has presented unforeseen challenges, we remain firmly on track to deliver our sales and adjusted EPS goals. We have also delivered exceptional margin expansion since launching the Flowserve Business System. Over the past 2 years, adjusted operating margins have improved by 530 basis points, and we reached our 2027 margin target 2 years ahead of schedule.
Speaker #2: In 2026, capital expenditure investments to drive organic growth and efficiency in our operations are expected to be $90 million to $100 million, and we anticipate at a minimum repurchasing shares to offset equity dilution.
Speaker #2: Turning to Slide 14, I'm extremely proud of the progress we've made against our 2027 financial targets, since establishing them in mid-2023. Though the macro environment has presented unforeseen challenges, we remain firmly on track to deliver our sales and adjusted EPS goals.
Speaker #2: We have also delivered exceptional margin expansion since launching the Flowserve business system. Over the past two years, adjusted operating margins have improved by 530 basis points and we reached our 2027 margin target two years ahead of schedule.
Speaker #2: FPD contributed meaningfully to this performance. While FCD's margin improvement has accelerated recently, given progress on operational excellence in our 80/20 program. Importantly, the structural enterprise-wide improvements we've made through the Flowserve business system along with sustained operational rigor give us confidence that these gains are durable, with more opportunity to enhance margins over time.
Amy Schwetz: FPD contributed meaningfully to this performance, while FCD's margin improvement has accelerated recently, given progress on operational excellence in our 80/20 program. Importantly, the structural enterprise-wide improvements we've made through the Flowserve Business System, along with sustained operational rigor, give us confidence that these gains are durable, with more opportunity to enhance margins over time. Turning to slide 15, continued momentum in both growth and profitability forms the foundation of our new 2030 long-term financial targets. We are targeting a mid-single-digit organic sales CAGR from 2025 to 2030, supported by ongoing commercial excellence initiatives, our 80/20 progress, and our expected growth across end markets over the cycle. We believe disciplined M&A represents an opportunity to further enhance our sales growth profile over time. Turning to margins, the success of the Flowserve Business System provides confidence in our ability to continue driving margin enhancements.
Amy Schwetz: FPD contributed meaningfully to this performance, while FCD's margin improvement has accelerated recently, given progress on operational excellence in our 80/20 program. Importantly, the structural enterprise-wide improvements we've made through the Flowserve Business System, along with sustained operational rigor, give us confidence that these gains are durable, with more opportunity to enhance margins over time. Turning to slide 15, continued momentum in both growth and profitability forms the foundation of our new 2030 long-term financial targets. We are targeting a mid-single-digit organic sales CAGR from 2025 to 2030, supported by ongoing commercial excellence initiatives, our 80/20 progress, and our expected growth across end markets over the cycle. We believe disciplined M&A represents an opportunity to further enhance our sales growth profile over time. Turning to margins, the success of the Flowserve Business System provides confidence in our ability to continue driving margin enhancements.
Speaker #2: Turning to Slide 15, continued momentum in both growth and profitability forms the foundation of our new 2030 long-term financial targets. We are targeting a mid-single-digit organic sales CAGR from 2025 to 2030, supported by ongoing commercial excellence initiatives, our 80/20 progress, and our expected growth across end markets over the cycle.
Speaker #2: We believe disciplined M&A represents an opportunity to further enhance our sales growth profile over time. Turning to margins, the success of the Flowserve business system provides confidence in our ability to continue driving margin enhancements.
Speaker #2: Commercial excellence is in the early stages, and we anticipate our 80/20 program will continue delivering benefits through 2030. We also see ongoing benefits from operational excellence as we continue to improve our execution and accelerate roofline consolidation.
Amy Schwetz: Commercial excellence is in the early stages, and we anticipate our 80/20 program will continue delivering benefits through 2030. We also see ongoing benefits from operational excellence as we continue to improve our execution and accelerate roofline consolidation. Overall, we are targeting 20% adjusted operating margins by 2030, representing an average annual expansion of 100 basis points. With the expected top-line growth, expanding operating margins, and additional capital allocation opportunities, we are targeting a double-digit adjusted EPS CAGR from 2025 to 2030. I'll now turn it back to Scott for closing remarks.
Amy Schwetz: Commercial excellence is in the early stages, and we anticipate our 80/20 program will continue delivering benefits through 2030. We also see ongoing benefits from operational excellence as we continue to improve our execution and accelerate roofline consolidation. Overall, we are targeting 20% adjusted operating margins by 2030, representing an average annual expansion of 100 basis points. With the expected top-line growth, expanding operating margins, and additional capital allocation opportunities, we are targeting a double-digit adjusted EPS CAGR from 2025 to 2030. I'll now turn it back to Scott for closing remarks.
Speaker #2: Overall, we are targeting 20 percent adjusted operating margins by 2030, representing an average annual expansion of 100 basis points. With the expected top-line growth, expanding operating margins, and additional capital allocation opportunities, we are targeting a double-digit adjusted EPS CAGR from 2025 to 2030.
Speaker #2: I'll now turn it back to Scott for closing remarks. Let's turn to Slide 16 to close out the prepared remarks. 2025 was a tremendous year for Flowserve.
Scott Rowe: ... Let's turn to slide 16 to close out the prepared remarks. 2025 was a tremendous year for Flowserve. I am proud of our achievements and the significant progress made by our associates, culminating in delivering our 2027 margin target two years ahead of schedule. Looking forward, we are well positioned to continue advancing and unlocking even greater potential for the company. Our updated long-term financial targets highlight our commitment to growth and further improve profitability. We are confident our strategic approach and the Flowserve business system have positioned the organization for continued sustainable growth and margin improvement. And with that, I'll turn the call back to the operator for Q&A.
R. Scott Rowe: Let's turn to slide 16 to close out the prepared remarks. 2025 was a tremendous year for Flowserve. I am proud of our achievements and the significant progress made by our associates, culminating in delivering our 2027 margin target two years ahead of schedule. Looking forward, we are well positioned to continue advancing and unlocking even greater potential for the company. Our updated long-term financial targets highlight our commitment to growth and further improve profitability. We are confident our strategic approach and the Flowserve business system have positioned the organization for continued sustainable growth and margin improvement. And with that, I'll turn the call back to the operator for Q&A.
Speaker #2: I am proud of our achievements and the significant progress made by our associates, culminating in delivering our 2027 margin target two years ahead of schedule.
Speaker #2: Looking forward, we are well positioned to continue advancing and unlocking even greater potential for the company. Our updated long-term financial targets highlight our commitment to growth and further improved profitability.
Speaker #2: We are confident our strategic approach and the Flowserve business system have positioned the organization for continued sustainable growth and margin improvement. And with that, I'll turn the call back to the operator for Q&A.
Speaker #2: We are confident our strategic approach and the Flowserve business system have positioned the organization for continued sustainable growth and margin improvement. And with that, I'll turn the call back to the operator for
Operator: Thank you. If you would like to ask a question at this time, you may signal by pressing star one on your telephone keypad. If you're using a speakerphone, please make sure your mute function is turned off to allow your signal to reach our equipment. Once again, star one for questions. We'll take our first question from Deane Dray with RBC Capital Markets.
Operator: Thank you. If you would like to ask a question at this time, you may signal by pressing star one on your telephone keypad. If you're using a speakerphone, please make sure your mute function is turned off to allow your signal to reach our equipment. Once again, star one for questions. We'll take our first question from Deane Dray with RBC Capital Markets.
Speaker #3: Thank you. If you would like to ask a question at this time, you may signal by pressing Star 1 on your telephone keypad. If you're using a speakerphone, please make sure your mute function is turned off to allow your signal to reach our equipment.
Speaker #3: Once again, Star 1 for questions. We'll take our first question from Dean Dre with RBC Capital
Speaker #3: Markets. Thank you.
Deane Dray: Thank you. Good morning, everyone.
Deane Dray: Thank you. Good morning, everyone.
Speaker #4: Good morning, everyone.
Speaker #5: Good morning, Dean.
Scott Rowe: Good morning, Dean.
R. Scott Rowe: Good morning, Dean.
Speaker #4: Hey, just I thought I'd give you a shout-out. For the quarter and for the year, great job on margins and free cash flow. So great progress there.
Deane Dray: Hey, hey, just, I thought to give you a shout-out for the quarter and for the year. Great job on margins and free cash flow. So, great progress there. And just, Nate, first question, can we talk about the organic revenue growth was a bit light this quarter, and also the guide is a bit light for 2026 on the organic side. And Amy mentioned some of the timing of projects, percentage of completion. Just some context there, size for us. And how does that, especially percentage of completion, how does that kind of come through in the first half of 2026? Thanks.
Deane Dray: Hey, hey, just, I thought to give you a shout-out for the quarter and for the year. Great job on margins and free cash flow. So, great progress there. And just, Nate, first question, can we talk about the organic revenue growth was a bit light this quarter, and also the guide is a bit light for 2026 on the organic side. And Amy mentioned some of the timing of projects, percentage of completion. Just some context there, size for us. And how does that, especially percentage of completion, how does that kind of come through in the first half of 2026? Thanks.
Speaker #4: And just it may first question, can we talk about the organic revenue growth was a bit light this quarter and also the guide is a bit light for '26 on the organic side?
Speaker #4: And Amy mentioned some of the timing of projects, percentage of completion, just some context there, size for us, and how does that especially percentage of completion, how does that kind of come through in the first half of '26?
Speaker #4: Thanks.
Amy Schwetz: Sure. So if we look at the Q4 revenue, probably about 50 basis points or a little bit higher than that of revenue headwinds from engineered projects on POC revenue that were pushed into the first half of the year. That was largely due to either customer delays or delays in getting inventory into some of our facilities that created that headwind. That will work itself out in the first half of the year. But as we look at our backlog that's in place in the first half of the year, you know, we're looking at revenue conversion in 2026, that's a little bit lower than what we've seen in prior years. So about 76% of our current backlog will turn in 2026.
Amy Schwetz: Sure. So if we look at the Q4 revenue, probably about 50 basis points or a little bit higher than that of revenue headwinds from engineered projects on POC revenue that were pushed into the first half of the year. That was largely due to either customer delays or delays in getting inventory into some of our facilities that created that headwind. That will work itself out in the first half of the year. But as we look at our backlog that's in place in the first half of the year, you know, we're looking at revenue conversion in 2026, that's a little bit lower than what we've seen in prior years. So about 76% of our current backlog will turn in 2026.
Speaker #6: Sure. So if we look at the fourth quarter revenue, probably about 50 basis points, or a little bit higher, than revenue headwinds from engineered projects on POC revenue that were pushed into the first half of the year.
Speaker #6: That was largely due to either customer delays or delays in getting inventory into some of our facilities that created that headwind. That will work itself out in the first half of the year.
Speaker #6: But as we look at our backlog that's in place, in the first half of the year, we're really looking at revenue conversion in 2026.
Speaker #6: It's a little bit lower than what we've seen in prior years, so about 76 percent of our current backlog will turn in 2026. And it's really the tale of two cities.
Amy Schwetz: It's really the tale of two cities, if you think about our business today. A really strong aftermarket, which can convert into revenue really quickly when it comes into the backlog. And then if we look at the strength of the nuclear market, that takes a little bit more time to develop through the system. And so that's the movement that you're seeing in revenue conversion. So in the first half of the year, we'd anticipate growth to be muted as we look at that. And so you think about that in two ways. One, both the backlog that's in place, and the second piece of that is really 80/20 efforts that accelerated in the second half of the year, wrapping around into 2026.
Amy Schwetz: It's really the tale of two cities, if you think about our business today. A really strong aftermarket, which can convert into revenue really quickly when it comes into the backlog. And then if we look at the strength of the nuclear market, that takes a little bit more time to develop through the system. And so that's the movement that you're seeing in revenue conversion. So in the first half of the year, we'd anticipate growth to be muted as we look at that. And so you think about that in two ways. One, both the backlog that's in place, and the second piece of that is really 80/20 efforts that accelerated in the second half of the year, wrapping around into 2026.
Speaker #6: If you think about our business today, a really strong aftermarket, which can convert into revenue really quickly when it comes into the backlog. And then if we look at the strength of the nuclear market, that takes a little bit more time to develop through the system, and so that's the movement that you're seeing in revenue conversion.
Speaker #6: So in the first half of the year, we'd anticipate growth to be muted as we look at that. And so you think about that in two ways.
Speaker #6: One, both the backlog that's in place and the second piece of that is really 80/20 efforts that accelerated in the second half of the year wrapping around into 2026.
Amy Schwetz: I'd just comment overall that, you know, what we've been trying to do with this business is create a much more resilient business model. So if we think about where we're at from a margin expansion standpoint, we've built a model that we think margin expansion can continue to happen, even in periods of time when revenue growth is muted. So we remain bullish on our opportunities to increase margins in the first half of the year, but we'll expect for some of that revenue growth to accelerate in the second half.
Amy Schwetz: I'd just comment overall that, you know, what we've been trying to do with this business is create a much more resilient business model. So if we think about where we're at from a margin expansion standpoint, we've built a model that we think margin expansion can continue to happen, even in periods of time when revenue growth is muted. So we remain bullish on our opportunities to increase margins in the first half of the year, but we'll expect for some of that revenue growth to accelerate in the second half.
Speaker #6: Just comment overall that what we've been trying to do with this business is create a much more resilient business model and so if we think about where we're at from a margin expansion standpoint, we've built a model that we think margin expansion can continue to happen even in periods of time when revenue growth is muted.
Speaker #6: So we remain bullish on our opportunities to increase margins in the first half of the year, but we’ll expect for some of that revenue growth to accelerate in the second half.
Deane Dray: Amy, that's really helpful. Thank you. And just as a follow-up, and I really didn't think I'd be asking this question, you know, last quarter, but here I am asking it now. Can you talk about the opportunity in Venezuela? I mean, I covered Flowserve for a long time. Venezuela was a meaningful business for you, you know, up until, like, 11 years ago. So you've had a presence, you probably have good content there. And maybe just what is the opportunity? What's the timeframe, and what should we be watching for? Thanks.
Deane Dray: Amy, that's really helpful. Thank you. And just as a follow-up, and I really didn't think I'd be asking this question, you know, last quarter, but here I am asking it now. Can you talk about the opportunity in Venezuela? I mean, I covered Flowserve for a long time. Venezuela was a meaningful business for you, you know, up until, like, 11 years ago. So you've had a presence, you probably have good content there. And maybe just what is the opportunity? What's the timeframe, and what should we be watching for? Thanks.
Speaker #4: Just as a follow-up—and I really didn't think I'd be asking this now—can you talk about the opportunity in Venezuela? I mean, I covered Flowserve for a long time.
Speaker #4: Venezuela was a meaningful business for you up until, like, 11 years ago. So you've had a presence. You probably have good content there. And maybe just, what is the opportunity?
Speaker #4: What's the timeframe? And what should we be watching for? Thanks.
Speaker #5: Yeah. Dean, you've covered Flowserve for a—was a meaningful, very long time. Venezuela market for us. This was before I got here, kind of that 2010 to 2014 timeframe.
Scott Rowe: Yeah, Dean, you've covered Flowserve for a very long time. Venezuela was a meaningful, you know, market for us. You know, this was before I got here, kind of that 2010 to 2014 timeframe. And at one point, we were doing, you know, probably at the most, roughly $80 million of revenue a year. We had 3 QRCs that were fully operational, and, you know, quite frankly, a very healthy business. The good news today is we have a large installed base across pumps and valves. And so if somebody were to go in and, you know, resume operations and start to invest in the country, then we are well positioned to support that. We currently have 1 QRC operational with a handful of people, and we're confident that we could kind of restart operations when appropriate.
R. Scott Rowe: Yeah, Dean, you've covered Flowserve for a very long time. Venezuela was a meaningful, you know, market for us. You know, this was before I got here, kind of that 2010 to 2014 timeframe. And at one point, we were doing, you know, probably at the most, roughly $80 million of revenue a year. We had 3 QRCs that were fully operational, and, you know, quite frankly, a very healthy business. The good news today is we have a large installed base across pumps and valves. And so if somebody were to go in and, you know, resume operations and start to invest in the country, then we are well positioned to support that. We currently have 1 QRC operational with a handful of people, and we're confident that we could kind of restart operations when appropriate.
Speaker #5: And at the most roughly $80 million of revenue a year we had three QRCs that were fully operational. And quite frankly, a very healthy business.
Speaker #5: We have a large installed base across pumps, and the good news today is valves. And so if somebody were to go in and resume operations and start to invest in the country, then we are well-positioned to support that.
Speaker #5: We currently have one QRC operational with a handful of people, and we're confident that we could kind of restart operations when appropriate. With all of that said, we don't have that in our 2026 numbers.
Scott Rowe: With all of that said, we don't have that in our 2026 numbers. I'm not going to predict or forecast when somebody will commit to go into the country and get things moving. But I would say, you know, if and when it happens, Flowserve is prepared to kind of pick back up, and it'll be a really nice opportunity that wasn't planned. And like you said, I certainly did not expect this in the last time we spoke in the Q3 earnings call.
R. Scott Rowe: With all of that said, we don't have that in our 2026 numbers. I'm not going to predict or forecast when somebody will commit to go into the country and get things moving. But I would say, you know, if and when it happens, Flowserve is prepared to kind of pick back up, and it'll be a really nice opportunity that wasn't planned. And like you said, I certainly did not expect this in the last time we spoke in the Q3 earnings call.
Speaker #5: I'm not going to predict or forecast when somebody will commit to go into the country and get things moving, but I would say if and when it happens, Flowserve is prepared to kind of pick back up, and it'll be a really nice opportunity. I would note that I did not expect this the last time we spoke in the Q3 earnings call.
Speaker #5: And like you said, I certainly did.
Speaker #4: Really appreciate that. Thank you.
Deane Dray: Really appreciate that. Thank you.
Deane Dray: Really appreciate that. Thank you.
Speaker #3: We'll take our next question from McHalloran.
Operator: We'll take our next question from Mike Halloran with Baird.
Operator: We'll take our next question from Mike Halloran with Baird.
Speaker #3: with planned.
Mike Halloran: ... Great. Thanks. Morning, everyone. Can we just talk through the simple question here, the confidence in the mid-single-digit order progression this year? I know sort of heard the front back half, but maybe more, some more detail on where that's stemming from, what your customers are saying, and any specific areas that you think drive it more than others.
Michael Halloran: Great. Thanks. Morning, everyone. Can we just talk through the simple question here, the confidence in the mid-single-digit order progression this year? I know sort of heard the front back half, but maybe more, some more detail on where that's stemming from, what your customers are saying, and any specific areas that you think drive it more than others.
Speaker #5: Good, thanks. Good morning, Baird. Good morning, everyone. Can we just talk through the simple question here—the confidence in the mid-single-digit order progression this year?
Speaker #5: I know I’ve certainly heard the front, back half, but maybe could you give some more detail on where that’s stemming from—what your customers are, any specific areas that you think drive it, and more than others?
Speaker #5: Yeah, right now about mid-single digits. Obviously, the world is a dynamic place, and we just talked about Venezuela. We can talk about other countries.
Scott Rowe: Yeah, absolutely. I'd say, Mike, we feel really good right now about mid-single digits. Obviously, the world is a dynamic place, and we just talked about Venezuela. We can talk about other countries. With that said, you know, we've got a lot of confidence in what we're doing. The teams are working really hard to grow the business. And, you know, I'll just kind of run through, you know, some of the reasons why we believe that mid-single digits is a good number. And, you know, I'll also just add, you know, we believe that's an organic number, and so I'm sure we'll talk about, you know, Trillium here very soon in one of the Q&A. But, you know, when we talk mid-single booking or mid-single digits on the booking side, we were really thinking organic.
R. Scott Rowe: Yeah, absolutely. I'd say, Mike, we feel really good right now about mid-single digits. Obviously, the world is a dynamic place, and we just talked about Venezuela. We can talk about other countries. With that said, you know, we've got a lot of confidence in what we're doing. The teams are working really hard to grow the business. And, you know, I'll just kind of run through, you know, some of the reasons why we believe that mid-single digits is a good number. And, you know, I'll also just add, you know, we believe that's an organic number, and so I'm sure we'll talk about, you know, Trillium here very soon in one of the Q&A. But, you know, when we talk mid-single booking or mid-single digits on the booking side, we were really thinking organic.
Speaker #5: With that said, we've got a lot of confidence in what we're doing. The teams are working really hard to grow the business—reasons why we believe that. And I'll just kind of run through some of them. Mid-single digits is a good number.
Speaker #5: And I’ll also just add, we believe that’s an organic number. I’m sure we’ll talk about Trillium here very soon in the Q&A, but when we talk mid-single digits on the booking side, we were really thinking organic.
Speaker #5: And so maybe I'll start with our aftermarket. And you've seen the numbers here. Our aftermarket continues to grow as we get more focused on our installed base and improving our capture rates.
Scott Rowe: You know, maybe I'll start with our aftermarket, and, you know, you've seen the numbers here. Our aftermarket continues to grow as we get more focused on our installed base and improving our capture rates. We believe that momentum is incredibly strong, and we believe that we can continue to grow the aftermarket at least at the mid-single-digit levels. And so that's half our business. And so we've got a team that's highly focused on that, great customer relationships, and we continue to find more opportunities to expand that. And then on just the end markets, you know, the single largest growth factor for us in 2026 and beyond is the power end market. And we talked a lot about nuclear in the Q3 earnings call, but traditional power is doing incredibly well, additionally.
R. Scott Rowe: You know, maybe I'll start with our aftermarket, and, you know, you've seen the numbers here. Our aftermarket continues to grow as we get more focused on our installed base and improving our capture rates. We believe that momentum is incredibly strong, and we believe that we can continue to grow the aftermarket at least at the mid-single-digit levels. And so that's half our business. And so we've got a team that's highly focused on that, great customer relationships, and we continue to find more opportunities to expand that. And then on just the end markets, you know, the single largest growth factor for us in 2026 and beyond is the power end market. And we talked a lot about nuclear in the Q3 earnings call, but traditional power is doing incredibly well, additionally.
Speaker #5: incredibly strong, and we believe that we We believe that momentum is can continue to grow the aftermarket at least at the mid-single digit levels.
Speaker #5: And so that's half our business. And so we've got a team that's highly focused on that, great customer relationships. And we continue to find more opportunities to expand that.
Speaker #5: And then on just the end markets, the single largest growth factor for us in 2026 and beyond is the power end market. And we talked a lot about nuclear in the Q3 earnings call, but traditional power is doing incredibly well additionally.
Speaker #5: And so we feel really good about those end markets, and power being at at least a double-digit number for us. And then general industries is also strong.
Scott Rowe: And so we feel really good about the, you know, those end markets and power being at least a double-digit number for us. And then general industries is also strong, and so we're seeing an uptick in general industry kind of project and base activity. That's primarily in North America and a little bit in the Middle East and in some parts of Latin America as well. And then finally, just geographically, you know, we didn't have a great year in the Middle East on the project side. Some of that was timing, some of it was delays in spending on the type of work that we do really well in the Middle East. But we do have visibility to Middle East spending accelerating and picking up in 2026.
R. Scott Rowe: And so we feel really good about the, you know, those end markets and power being at least a double-digit number for us. And then general industries is also strong, and so we're seeing an uptick in general industry kind of project and base activity. That's primarily in North America and a little bit in the Middle East and in some parts of Latin America as well. And then finally, just geographically, you know, we didn't have a great year in the Middle East on the project side. Some of that was timing, some of it was delays in spending on the type of work that we do really well in the Middle East. But we do have visibility to Middle East spending accelerating and picking up in 2026.
Speaker #5: And so we're seeing an uptick in general industry kind of project and base activity. That's primarily in North America, and a little bit in the Middle East and some parts of Latin America as well.
Speaker #5: And then finally, just geographically, we didn't have a great year in the Middle East on the project side. Some of that was timing. Some of it was delays in spending on the type of work that we do really well in the Middle East.
Speaker #5: But we do have visibility to Middle East spending accelerating and picking up in 2026. And that's going to be a little bit more kind of mid- to back-year weighted, but we feel really good about our ability to convert orders in the Middle East.
Scott Rowe: You know, that's gonna be a little bit more kind of mid to back year weighted, but we feel really good about our ability to convert orders in the Middle East. Then just lastly, when we look at our project funnel, we have seen an increase both sequentially and year-on-year in our project funnel, again, giving us confidence that mid-single digits is a, you know, a place that, that we feel pretty good about.
R. Scott Rowe: You know, that's gonna be a little bit more kind of mid to back year weighted, but we feel really good about our ability to convert orders in the Middle East. Then just lastly, when we look at our project funnel, we have seen an increase both sequentially and year-on-year in our project funnel, again, giving us confidence that mid-single digits is a, you know, a place that, that we feel pretty good about.
Speaker #5: And then just lastly, when we look at our project funnel, we have seen an increase both sequentially and year-on-year in our project funnel. Again, giving us confidence that mid-single digits is a place that we feel pretty good about.
Speaker #4: Great. Super helpful. And then on Trillium, congrats on getting that portion of the company. Good assets. So two-fold question here. First, with the 70% power exposure, what kind of momentum are they seeing on the order side?
Mike Halloran: Great. Super, super helpful. And then, on Trillium, congrats on getting that portion of the company, good asset. So twofold question here. First, with the 70% power exposure, what kind of momentum are they seeing on the order side? Is it similar to what you just talked to? And then secondarily, maybe just talk through the commercial and cost synergy opportunity as well.
Michael Halloran: Great. Super, super helpful. And then, on Trillium, congrats on getting that portion of the company, good asset. So twofold question here. First, with the 70% power exposure, what kind of momentum are they seeing on the order side? Is it similar to what you just talked to? And then secondarily, maybe just talk through the commercial and cost synergy opportunity as well.
Speaker #4: Is it similar to what you just talked to? And then secondarily, maybe just talk through the commercial and cost synergy opportunity as
Speaker #4: well. Sure.
Scott Rowe: Sure. Yeah, look, we're excited about Trillium. It's a good asset. For those that remember, this came out of the Weir business, and we're buying... Just to be super clear, we're buying the valve portfolio of Trillium. And, you know, we believe that they've got kind of best-in-class valve assets that serve, you know, mission-critical flow control solutions, primarily in nuclear and the traditional power markets, and that makes up 70% of the business. Additionally, it's a high aftermarket contributor, and so we feel really good about our ability to leverage our QRC network to tap into their 200,000 valves and actuators that are around the world and continue to grow that. Like us, they've seen a, you know, a nice, healthy kind of run rate in both the nuclear and the traditional power bookings.
R. Scott Rowe: Sure. Yeah, look, we're excited about Trillium. It's a good asset. For those that remember, this came out of the Weir business, and we're buying... Just to be super clear, we're buying the valve portfolio of Trillium. And, you know, we believe that they've got kind of best-in-class valve assets that serve, you know, mission-critical flow control solutions, primarily in nuclear and the traditional power markets, and that makes up 70% of the business. Additionally, it's a high aftermarket contributor, and so we feel really good about our ability to leverage our QRC network to tap into their 200,000 valves and actuators that are around the world and continue to grow that. Like us, they've seen a, you know, a nice, healthy kind of run rate in both the nuclear and the traditional power bookings.
Speaker #5: Yeah. We're excited about Trillium. It's a good asset for those that remember this came out of the weird business. And we're buying just to be super clear, we're buying the valve portfolio of Trillium.
Speaker #5: And we believe that they've got kind of best-in-class valve assets that serve mission-critical flow control solutions, primarily in nuclear and the traditional power markets.
Speaker #5: And that makes up 70% of the business. Additionally, it's a high aftermarket contributor. And so we feel really good about our ability to leverage our QRC network to tap into their 200,000 valves and actuators that are around the world and continue to grow that.
Speaker #5: Like us, they've seen a nice, healthy kind of run rate in both the nuclear and the traditional power bookings. And so this is something that we like.
Scott Rowe: And so, you know, this is something that we like, the positive momentum in those end markets and building backlog as we kind of moved into the transaction. And so we believe that, you know, with our kind of nuclear relationships, the strong customer presence, and the end market kind of tailwind on power, we're pretty excited about the commercial opportunities here to leverage what we have and the ability to grow this business with some of the nuclear outlook. And, you know, I would say that's, you know, obviously the new nuclear reactors, some of the life extensions in nuclear, and then potentially, and, you know, when things move forward in SMR, this business is positioned well to take share in that upcoming and emerging market. And so all in all, we feel good.
R. Scott Rowe: And so, you know, this is something that we like, the positive momentum in those end markets and building backlog as we kind of moved into the transaction. And so we believe that, you know, with our kind of nuclear relationships, the strong customer presence, and the end market kind of tailwind on power, we're pretty excited about the commercial opportunities here to leverage what we have and the ability to grow this business with some of the nuclear outlook. And, you know, I would say that's, you know, obviously the new nuclear reactors, some of the life extensions in nuclear, and then potentially, and, you know, when things move forward in SMR, this business is positioned well to take share in that upcoming and emerging market. And so all in all, we feel good.
Speaker #5: The positive momentum in those end markets and building backlog as we kind of moved into the transaction. And so we believe that with our kind of nuclear relationships, the strong customer presence, the end market kind of tailwind on power, we're pretty excited about the commercial opportunities here to leverage what we have and the ability to grow this business with some of the nuclear outlook.
Speaker #5: And I would say that's obviously the new nuclear reactors, some of the life extensions in nuclear, and then SMR. This business is potentially, and when things move forward, in a position to take share in that upcoming and emerging market.
Speaker #5: And so all in all, we feel good. Just on the synergy side, we didn't publish a number on the cost synergy. I would say that there are cost synergies in this business.
Scott Rowe: Just on the synergy side, you know, we didn't publish a number on the cost synergy. I would say that there are cost synergies in this business. It would be exactly what you would expect. You know, we'll use our operational excellence program and the Flowserve Business System to do exactly what we did with Mogas, to get the manufacturing improvements, the supply chain savings. We will run 80/20 very quickly in the portfolio. In fact, we had a conversation last week about starting to pull that data in the right way that allows us to launch 80/20 right out of the gates. There will be some roofline consolidation as we move forward as well. The one thing I will highlight, that this is a carve-out, so it's owned by private equity today.
R. Scott Rowe: Just on the synergy side, you know, we didn't publish a number on the cost synergy. I would say that there are cost synergies in this business. It would be exactly what you would expect. You know, we'll use our operational excellence program and the Flowserve Business System to do exactly what we did with Mogas, to get the manufacturing improvements, the supply chain savings. We will run 80/20 very quickly in the portfolio. In fact, we had a conversation last week about starting to pull that data in the right way that allows us to launch 80/20 right out of the gates. There will be some roofline consolidation as we move forward as well. The one thing I will highlight, that this is a carve-out, so it's owned by private equity today.
Speaker #5: It would be exactly what you would expect. We'll use our operational excellence program and the full-service business system to do exactly what we did with MOGUS to get the manufacturing improvements and the supply chain savings.
Speaker #5: We will run 80/20 very quickly in the portfolio. In fact, we had a conversation last week about starting to pull that data in the right way that allows us to launch 80/20 right out of the gates.
Speaker #5: And there will be some roofline consolidation as we move forward as well. The one thing I will highlight is that this is a carve-out, so it's owned by private equity today.
Speaker #5: We're carving out the valve business. And so the overhead and some of that corporate synergies won't come through like you would normally see. But overall, I'd say a high level grow this business and that we can move the margins forward running the full-service business system of confidence that we can continue to
Scott Rowe: We're carving out the valve business, and so, you know, the overhead and some of that corporate synergies won't come through like you would normally see. But, you know, overall, I'd say a high level of confidence that we can continue to grow this business and that we can move the margins forward, running the Flowserve Business System playbook.
R. Scott Rowe: We're carving out the valve business, and so, you know, the overhead and some of that corporate synergies won't come through like you would normally see. But, you know, overall, I'd say a high level of confidence that we can continue to grow this business and that we can move the margins forward, running the Flowserve Business System playbook.
Mike Halloran: Really appreciate it, Scott. Thanks.
Michael Halloran: Really appreciate it, Scott. Thanks.
Speaker #1: Thank you. We'll take our next question from Amit Mirota.
Operator: Thank you. We'll take our next question from Amit Mehrotra with UBS.
Operator: Thank you. We'll take our next question from Amit Mehrotra with UBS.
Speaker #6: Thanks. Good morning, everybody. Appreciate you letting me ask a question. I wanted to talk about the 2030 outlook and obviously the implied acceleration in growth after '25 and what your guiding for '26.
Amit Mehrotra: ... Thanks. Good morning, everybody. Appreciate you letting me ask a question. I wanted to talk about the 2030 outlook and, you know, obviously, the implied acceleration in growth after 25 and what you're guiding for 26. I assume it's because of what you're seeing in the power bookings. I think there was- they were up mid-teens in the quarter. And obviously, now that's becoming a bigger part of the business, so Trillium, maybe high teens or something like that, and nuclear in particular. Maybe just talk about that and what you think those things actually mean for kind of the structural change in through cycle growth once we get towards the end of this year into 27.
Amit Mehrotra: Thanks. Good morning, everybody. Appreciate you letting me ask a question. I wanted to talk about the 2030 outlook and, you know, obviously, the implied acceleration in growth after 25 and what you're guiding for 26. I assume it's because of what you're seeing in the power bookings. I think there was- they were up mid-teens in the quarter. And obviously, now that's becoming a bigger part of the business, so Trillium, maybe high teens or something like that, and nuclear in particular. Maybe just talk about that and what you think those things actually mean for kind of the structural change in through cycle growth once we get towards the end of this year into 27.
Speaker #6: I power bookings. I think there were up mid-teens in the quarter. And obviously now that's becoming a bigger part of the business with Trillium maybe high teens or something like that, a nuclear in particular.
Speaker #6: Maybe just talk about that and what you think those things actually mean for kind of the structural change and through-cycle growth once we get towards the end of this year into '27.
Speaker #5: Sure. Yeah. I'll just tie it to some of the mega themes that we're seeing. Obviously, electricity is a big one, and that's something that's important around the world to drive security.
Scott Rowe: Sure. Yeah, yeah, I'll just tie it to, like, some of the mega themes that we're seeing. You know, obviously, electricity is a big one, and, and that's something that's important around the world to drive, you know, security and then further regionalization, and then there's a digital component. And so all of those things have played into kinda how do we think about the long term and how do we grow our business. The other thing I would say is, you know, when we think about our Flowserve Business System, we, we've been hitting 80/20 hard. We've put a little bit of a dampener on, you know, some of the growth as we've been focusing on our margins and cleaning up that portfolio. The heavy lift of SKU reductions is essentially complete, and now we've launched Commercial Excellence. And so we're about six months into Commercial Excellence.
R. Scott Rowe: Sure. Yeah, yeah, I'll just tie it to, like, some of the mega themes that we're seeing. You know, obviously, electricity is a big one, and, and that's something that's important around the world to drive, you know, security and then further regionalization, and then there's a digital component. And so all of those things have played into kinda how do we think about the long term and how do we grow our business. The other thing I would say is, you know, when we think about our Flowserve Business System, we, we've been hitting 80/20 hard. We've put a little bit of a dampener on, you know, some of the growth as we've been focusing on our margins and cleaning up that portfolio. The heavy lift of SKU reductions is essentially complete, and now we've launched Commercial Excellence. And so we're about six months into Commercial Excellence.
Speaker #5: And then further regionalization. And then there's a digital component. And so all of those things have played into kind of how do we think about the long term and how do we grow our business.
Speaker #5: The other thing I would say is when we think about our full-service business system, we've been hitting 80/20 hard. We've put a little bit of a dampener on some of the growth as we've been focusing on our margins and cleaning up that portfolio.
Speaker #5: Reductions are essentially complete. And now, the heavy lift of SKU—we've launched commercial excellence. And so, we're about six months into commercial excellence. We believe we have a long way to go.
Scott Rowe: We believe we have a long way to go. We are in the very early innings here, and that, again, gives us a foundation to grow the business for years to come. And so, you know, I think, you know, mid-single digits here on the, the long-term 2030 makes a, a lot of sense. We've got many levers to pull to drive that growth. And, you know, we need the macro environment to hold up, but right now, we think the megatrends and what's going on in the world should support so this target, and the team is very focused to drive this growth.
R. Scott Rowe: We believe we have a long way to go. We are in the very early innings here, and that, again, gives us a foundation to grow the business for years to come. And so, you know, I think, you know, mid-single digits here on the, the long-term 2030 makes a, a lot of sense. We've got many levers to pull to drive that growth. And, you know, we need the macro environment to hold up, but right now, we think the megatrends and what's going on in the world should support so this target, and the team is very focused to drive this growth.
Speaker #5: We are in the very early innings here, and that, again, gives us a foundation to grow the business for years to come. And so I think mid-single digits here on the long-term, 2030, makes a lot of sense.
Speaker #5: We've got mini levers to pull to drive that growth, and we need the macro environment to hold up. But right now, we think the mega trends and what's going on in the world should support this target, and the team is very
Speaker #5: focused to drive this growth. And
Amy Schwetz: And Amit, the other thing that I'd mention, and this is more formulaic in nature, is that if you look at our backlog conversion in 2026, which is a bit of a headwind in terms of organic growth, with the nuclear component, that's really a tailwind for us in terms of 2030 targets. So we've got a, a large portion of our backlog that's gonna materialize over, over the next five years and really presents an opportunity for us, to compound from a, from a revenue growth perspective.
Amy Schwetz: And Amit, the other thing that I'd mention, and this is more formulaic in nature, is that if you look at our backlog conversion in 2026, which is a bit of a headwind in terms of organic growth, with the nuclear component, that's really a tailwind for us in terms of 2030 targets. So we've got a, a large portion of our backlog that's gonna materialize over, over the next five years and really presents an opportunity for us, to compound from a, from a revenue growth perspective.
Speaker #7: Amit, the other thing that I'd mention, and this is more formulaic in nature, is that if you look at our backlog conversion in 2026, which is a bit of a headwind in terms of organic growth with the nuclear component, that's really a tailwind for us in terms of 2030 targets.
Speaker #7: So, we've got a large portion of our backlog that's going to materialize over the next five years and really presents an opportunity for us to compound from a revenue growth perspective.
Speaker #6: Right. I guess that was my point, right? At the end of the day, if you look at the compounded growth over time versus what you're doing in '26, it implies a step up in 2017.
Amit Mehrotra: Right. I guess that was my point, right? At the end of the day, if you look at the compounded growth over time versus what you're doing in 2026, it implies a step up in 2027 to exactly that point. Can I just ask another question on general industrial, and what you saw? Because obviously, there's this view right now that cyclicals are doing quite well because of this anticipation of some improvement. Are you seeing any evidence of that in your bookings? And then just related to that backlog conversion, I think you might have mentioned that earlier. I joined a little bit later, but is there an EPS cadence that gets maybe pushed out a little bit more to the back end because that backlog is converting a little bit later?
Amit Mehrotra: Right. I guess that was my point, right? At the end of the day, if you look at the compounded growth over time versus what you're doing in 2026, it implies a step up in 2027 to exactly that point. Can I just ask another question on general industrial, and what you saw? Because obviously, there's this view right now that cyclicals are doing quite well because of this anticipation of some improvement. Are you seeing any evidence of that in your bookings? And then just related to that backlog conversion, I think you might have mentioned that earlier. I joined a little bit later, but is there an EPS cadence that gets maybe pushed out a little bit more to the back end because that backlog is converting a little bit later?
Speaker #6: It's exactly that point. Can I just ask another question on general industrial and what you saw? Because, obviously, there's this view right now that cyclicals are doing quite well because of this anticipation of some improvement.
Speaker #6: Are you seeing any evidence of that in your bookings? And then, just related to that backlog conversion—I think you might have mentioned that earlier.
Speaker #6: I joined a little bit later, but is there an EPS cadence that gets maybe pushed out a little bit more to the back end because that backlog is converting a little bit later?
Speaker #5: Yeah, I'll let Amy hit the backlog conversion. I'll start on the general industrial side. So, general industries has been really strong for us this year.
Scott Rowe: Yeah. I'll let Amy hit the backlog conversion. I'll start on the general industries side. So general industries has been really strong for us this year. We continue to make progress. A lot of that's part of our 3D strategy and the diversification and just getting the teams very focused in this market. And so I think we've been able to take a little bit of share here as we lean in on the diverse end markets that we've got a product and offering for. And, you know, quite frankly, we're seeing nice growth in North America, parts of Latin America on general industries, and then there's parts of the Middle East that this is working as well.
R. Scott Rowe: Yeah. I'll let Amy hit the backlog conversion. I'll start on the general industries side. So general industries has been really strong for us this year. We continue to make progress. A lot of that's part of our 3D strategy and the diversification and just getting the teams very focused in this market. And so I think we've been able to take a little bit of share here as we lean in on the diverse end markets that we've got a product and offering for. And, you know, quite frankly, we're seeing nice growth in North America, parts of Latin America on general industries, and then there's parts of the Middle East that this is working as well.
Speaker #5: We continue to make progress. A lot of that's part of our 3D strategy and the diversification and just getting the teams very focused in this market.
Speaker #5: little bit of share here as we lean And so I think we've been able to take a in on the diverse end markets that we've got a product and offering for.
Speaker #5: And quite frankly, we're seeing nice growth in North America, parts of Latin America on general industries, and then there's parts of the Middle East that this is working as well.
Speaker #5: Some of the themes here would be the water markets, pharmaceuticals, and then, I’d just say, just kind of broader industries across the board where we’re able to put full control product in.
Scott Rowe: Some of the themes here would be the water markets, pharmaceuticals, and then just, I'd just say, just kind of broader industries across the board, where we're able to put flow control product in.
R. Scott Rowe: Some of the themes here would be the water markets, pharmaceuticals, and then just, I'd just say, just kind of broader industries across the board, where we're able to put flow control product in.
Speaker #7: Yeah. And from an EPS cadence, obviously it's going to be impacted by some of the revenue cadence that we talked about. We're really going back to a more typical flow serve year, which looks more with the first half being muted from a volume perspective.
Amy Schwetz: Yeah, and from an EPS cadence, obviously, it's gonna be impacted by some of the revenue cadence that we talked about. We're really going back to a more typical Flowserve year, which looks more with the first half being muted from a volume perspective. We're still confident about our ability to perform well and expand margins over that period of time. But probably about 40%, maybe a little bit more of our EPS, will come in the first half of the year, with the remainder in the second half. And as is always the case, our Q1 we would expect to be the lowest quarter of the year from an EPS perspective.
Amy Schwetz: Yeah, and from an EPS cadence, obviously, it's gonna be impacted by some of the revenue cadence that we talked about. We're really going back to a more typical Flowserve year, which looks more with the first half being muted from a volume perspective. We're still confident about our ability to perform well and expand margins over that period of time. But probably about 40%, maybe a little bit more of our EPS, will come in the first half of the year, with the remainder in the second half. And as is always the case, our Q1 we would expect to be the lowest quarter of the year from an EPS perspective.
Speaker #7: We're still confident about our ability to perform well and expand margins. Over that period of time, but probably about 40%, maybe a little bit more of our EPS will come in the first half of the year, with the remainder in the second half.
Speaker #7: And, as is always the case, our first quarter—Q1—we would expect to be the lowest quarter of the year from an EPS perspective.
Speaker #7: perspective. Got it.
Amit Mehrotra: Got it. That's very helpful. Congrats, guys. Thank you very much.
Amit Mehrotra: Got it. That's very helpful. Congrats, guys. Thank you very much.
Speaker #6: That's very helpful. Congrats, guys. Thank you very much.
Speaker #5: Yep. Thank you.
Scott Rowe: Yep, thank you.
R. Scott Rowe: Yep, thank you.
Amy Schwetz: Thanks.
Amy Schwetz: Thanks.
Speaker #7: Thanks. We'll take our next question.
Operator: We'll take our next question from Joe Giordano with TD Cowen.
Operator: We'll take our next question from Joe Giordano with TD Cowen.
Speaker #1: from Joe Giordano with TD
Speaker #1: From Joe Giordano with TD Cowan. Hey, good morning,
Joe Giordano: Hey, good morning, guys.
Joseph Giordano: Hey, good morning, guys.
Speaker #6: Morning, Joe. So, guys, we’ve touched on this, but on the 2030—how much of that, sorry, how much of that margin guide is dependent on volume?
Scott Rowe: Morning, Joe.
R. Scott Rowe: Morning, Joe.
Joe Giordano: So we talked, we've touched on this, but, like, on the 2030, you know, how much of that margin guide is dependent on volume? 'Cause, like, if we're being fair, that's where you're gonna get the biggest pushback, you know, in the mid-single-digit order growth this year. You know, a lot of that's probably in Q2 on an easier comp. Like, organically, we just haven't seen really going above that 1.25 with, like, a thrust. So, like, if I told you that the top line, if I wanted to push back on that a little bit, how much of that margin do you think you still get independent of volume?
Joseph Giordano: So we talked, we've touched on this, but, like, on the 2030, you know, how much of that margin guide is dependent on volume? 'Cause, like, if we're being fair, that's where you're gonna get the biggest pushback, you know, in the mid-single-digit order growth this year. You know, a lot of that's probably in Q2 on an easier comp. Like, organically, we just haven't seen really going above that 1.25 with, like, a thrust. So, like, if I told you that the top line, if I wanted to push back on that a little bit, how much of that margin do you think you still get independent of volume?
Speaker #6: Because, if we're being fair, that's where you're going to get the biggest pushback in the mid-single-digit order growth this year. A lot of that's probably into Q1 and easier comp.
Speaker #6: Organically, we just haven't seen really going above that 1.25 with a thrust. So, if I told you that—on the top line—if I wanted to push back on that a little bit, how much of that margin do you think you still get independent of volume?
Speaker #5: Yeah, so Joe, I'll start. I'm sure Amy will chime in on this one too. I'd say we feel really good about our ability to drive margins.
Scott Rowe: Yeah. So, Joe, I'll start. I'm sure Amy will chime in on this one, too. I'd say, you know, we feel really good about our ability to drive margins. And so when we think about our plan, the way we look at things is the initiatives and the actions we need to do to drive margin expansion. And if you kinda look backwards, right, we haven't had significant revenue growth over the last two years, but we've been able to expand margins significantly. And so, you know, obviously, some of the...
R. Scott Rowe: Yeah. So, Joe, I'll start. I'm sure Amy will chime in on this one, too. I'd say, you know, we feel really good about our ability to drive margins. And so when we think about our plan, the way we look at things is the initiatives and the actions we need to do to drive margin expansion. And if you kinda look backwards, right, we haven't had significant revenue growth over the last two years, but we've been able to expand margins significantly. And so, you know, obviously, some of the...
Speaker #5: And so, when we think about our plan, the way we look at things is the initiatives and the actions we need to do to drive margin expansion.
Speaker #5: And if you kind of look backwards, right, we haven't had significant revenue growth over the last two years, but we've been able— and so, obviously, some of the— I'm not going to call it low-hanging fruit because it was a lot of work, but a lot of the— to expand margins significantly.
Scott Rowe: You know, I'm not gonna call it low-hanging fruit because it was a lot of work, but a lot of the bigger, you know, gains have been realized, and we've got a, what I'll call, you know, to get to the 20%, a steady progression of margins of 500 basis points, or 100 basis points approximately every year. And, you know, I just think through operational excellence, 80/20 still has more room to run. The ability to continue to get a better mix with aftermarket, all gives us confidence that we can continue to do this. And so, you know, obviously, revenue growth and leverage would help us substantially, but I feel confident that we can get to these margins even without significant revenue growth.
R. Scott Rowe: You know, I'm not gonna call it low-hanging fruit because it was a lot of work, but a lot of the bigger, you know, gains have been realized, and we've got a, what I'll call, you know, to get to the 20%, a steady progression of margins of 500 basis points, or 100 basis points approximately every year. And, you know, I just think through operational excellence, 80/20 still has more room to run. The ability to continue to get a better mix with aftermarket, all gives us confidence that we can continue to do this. And so, you know, obviously, revenue growth and leverage would help us substantially, but I feel confident that we can get to these margins even without significant revenue growth.
Speaker #5: Bigger gains have been realized. And we've got what I'll call a, to get to the 20%, a steady progression of margins of 500 basis points, or 100 basis points approximately every year.
Speaker #5: Excellence, 80/20 still has more room to run. The ability to continue to get a better mix with aftermarket all gives us confidence that we can continue to do this.
Speaker #5: And so, obviously, revenue growth and leverage would help us substantially, but I feel confident that we can get to these margins even without significant revenue.
Speaker #5: growth. Yeah.
Amy Schwetz: Yeah, and I—the only thing I'm going to add to what Scott has said is, those actions have begun. So as I referenced in my remarks, roofline actions are accelerating. We're seeing the benefits of 80/20. That program is well established now within our BUs and as part of our business system. And so we feel very confident that the actions have been put in motion to help deliver those margins—or to help deliver those improved margins, regardless of what happens from a volume perspective. That said, it's a two-prong approach. We are focused on growth. Commercial excellence is in its early days. I'm excited about that program. I think it's something that's going to pay dividends.
Amy Schwetz: Yeah, and I—the only thing I'm going to add to what Scott has said is, those actions have begun. So as I referenced in my remarks, roofline actions are accelerating. We're seeing the benefits of 80/20. That program is well established now within our BUs and as part of our business system. And so we feel very confident that the actions have been put in motion to help deliver those margins—or to help deliver those improved margins, regardless of what happens from a volume perspective. That said, it's a two-prong approach. We are focused on growth. Commercial excellence is in its early days. I'm excited about that program. I think it's something that's going to pay dividends.
Speaker #7: And the only thing I'm going to add to what Scott has said is, those actions have begun. So, as I referenced in my remarks, roofline actions are accelerating.
Speaker #7: motion to help deliver those margins, or to help deliver those improved margins, regardless of what happens from a volume perspective. That said, it's a two-pronged approach.
Speaker #7: We are focused on growth. Commercial excellence is in its early days. I'm excited about that program. I think it's something that's going to pay dividends.
Speaker #7: And so, combining the focus with the end markets that we're serving, I think it's going to be a good recipe for revenue growth over time.
Amy Schwetz: And so when you combine the focus on commercial excellence with the end markets that we're serving, I think it's going to be a good recipe for revenue growth over time.
Amy Schwetz: And so when you combine the focus on commercial excellence with the end markets that we're serving, I think it's going to be a good recipe for revenue growth over time.
Speaker #7: time. Fair
Joe Giordano: Fair enough. And then on, you know, you're making a bet here on nuclear, both with your wallets and with your messaging, and I think all of us understand why. If for whatever reason, like, the power build-out is just significantly more gas turbines and things like that and less nuclear than what the current view is, what are the implications for Flowserve in terms of, I know you're on those things, but lower content and what that would mean for, like, these targets and things like that?
Joseph Giordano: Fair enough. And then on, you know, you're making a bet here on nuclear, both with your wallets and with your messaging, and I think all of us understand why. If for whatever reason, like, the power build-out is just significantly more gas turbines and things like that and less nuclear than what the current view is, what are the implications for Flowserve in terms of, I know you're on those things, but lower content and what that would mean for, like, these targets and things like that?
Speaker #6: Enough. And then on, you're making a bet here on nuclear, both with your wallets and with your messaging, and I think all of us understand why.
Speaker #6: If, for whatever reason, buildout is just significantly more gas than what the current view is, what are turbines and things like that, and less nuclear than—
Speaker #6: The implications for Flowserve in terms of, I know you're on those things, but lower content and what that would mean when you go for these targets and things like that?
Speaker #5: Yeah, I mean, I'll just start by saying we do believe that nuclear progresses forward. I've had several conversations with customers, even in the last couple of weeks.
Scott Rowe: Yeah, I mean, I'll just start by saying we do believe that nuclear progresses forward. I've had several conversations with customers, you know, even in the last couple of weeks, and so I just think nuclear has to be a part of the equation as we go forward. You know, let's just say that it's not as optimistic as some of the numbers we put out in Q3, which I think were, you know, right down the fairway of what would be kind of public commentary on nuclear growth. But if that were to happen, and the shift goes toward more of the traditional power, we're well positioned for that growth. Like, we've got products that support your single cycle, combined cycle. We can support coal in China.
R. Scott Rowe: Yeah, I mean, I'll just start by saying we do believe that nuclear progresses forward. I've had several conversations with customers, you know, even in the last couple of weeks, and so I just think nuclear has to be a part of the equation as we go forward. You know, let's just say that it's not as optimistic as some of the numbers we put out in Q3, which I think were, you know, right down the fairway of what would be kind of public commentary on nuclear growth. But if that were to happen, and the shift goes toward more of the traditional power, we're well positioned for that growth. Like, we've got products that support your single cycle, combined cycle. We can support coal in China.
Speaker #5: And so I just think nuclear has to be a part of the equation as we go forward. Let's just say that it's not as optimistic as some of the numbers we put out in Q3, which I think we're right down the fairway of what would be kind of public commentary on nuclear growth.
Speaker #5: And the shift goes toward more of—but if that weren't to happen—the traditional power, we're well positioned for that growth. We've got products that support single-cycle, combined-cycle.
Speaker #5: We can support coal in China. We get a little bit of content on some of the renewables as well, and so maybe the content isn't as high.
Scott Rowe: We, you know, we get a little bit of content on some of the renewables as well. And so, you know, maybe the content isn't as high. You know, certainly the barriers to entry in those products are not the same as nuclear, but we'll still drive growth, and we're well positioned to do that as we go forward. The Trillium acquisition supports that as well, right? So they have a nice, traditional power part of their business, and we'll continue to work that. And then finally, I'd just say that, you know, on the aftermarket side, we'll continue to get the nuclear aftermarket, and even on the traditional power side, you know, folks are investing in, you know, whatever form of power generation to do an upgrade or a re-rate or get more capacity out of that asset.
R. Scott Rowe: We, you know, we get a little bit of content on some of the renewables as well. And so, you know, maybe the content isn't as high. You know, certainly the barriers to entry in those products are not the same as nuclear, but we'll still drive growth, and we're well positioned to do that as we go forward. The Trillium acquisition supports that as well, right? So they have a nice, traditional power part of their business, and we'll continue to work that. And then finally, I'd just say that, you know, on the aftermarket side, we'll continue to get the nuclear aftermarket, and even on the traditional power side, you know, folks are investing in, you know, whatever form of power generation to do an upgrade or a re-rate or get more capacity out of that asset.
Speaker #5: Certainly, the barriers to entry in those nuclear, but we'll still drive growth. Products are not the same as, and we're well positioned to do that as we go forward.
Speaker #5: The Trillium acquisition supports that as well, right? So they have a nice traditional power part of their business, and we'll continue to work that.
Speaker #5: And then finally, I just say continue to get we'll continue to get the that on the aftermarket side, we the traditional power side, folks nuclear aftermarket and even on are investing in whatever form of power generation to do an upgrade or a asset.
Speaker #5: Re-rate, or get more capacity out of that. And so as that work evolves, we're typically well positioned to get the aftermarket work around both traditional and nuclear.
Scott Rowe: And so as that work evolves, we're typically well positioned to get the aftermarket work around both traditional and nuclear.
R. Scott Rowe: And so as that work evolves, we're typically well positioned to get the aftermarket work around both traditional and nuclear.
Joe Giordano: Appreciate the color, guys. Thank you.
Joseph Giordano: Appreciate the color, guys. Thank you.
Speaker #6: Appreciate the color, guys. Thank
Speaker #6: you.
Speaker #1: We'll take our next question from
Operator: We'll take our next question from Andy Kaplowitz with Citi.
Operator: We'll take our next question from Andy Kaplowitz with Citi.
Speaker #1: Andy Kaplowitz with City.
Speaker #8: Hey, good morning, guys. This is actually Jose Yep.
Andy Kaplowitz: Hey, good morning, guys. This is actually Jose Tolkan for Andy.
[Analyst] (Citigroup Inc.): Hey, good morning, guys. This is actually Jose Tolkan for Andy.
Speaker #8: Filcon for Andy.
Scott Rowe: Yep. Hey, good morning, Jose.
R. Scott Rowe: Yep. Hey, good morning, Jose.
Speaker #6: Hey, good morning, Jose.
Speaker #8: Hey, good morning. I did want to touch on MOGAS. It seems like you've been able to integrate that now, and you're getting that accretion to segment margins.
Andy Kaplowitz: Hey, good morning. I did want to touch on MOGAS. It seems like you've been able to integrate that now, and you're getting that accretion to segment margins. So maybe you can talk a little about what you've learned from that integration. But I'm also curious if you could talk about what you're seeing for bookings opportunities for that business, given that MOGAS is about 50% mining exposed, and some of the mining read-throughs there's been recently has been positive.
[Analyst] (Citigroup Inc.): Hey, good morning. I did want to touch on MOGAS. It seems like you've been able to integrate that now, and you're getting that accretion to segment margins. So maybe you can talk a little about what you've learned from that integration. But I'm also curious if you could talk about what you're seeing for bookings opportunities for that business, given that MOGAS is about 50% mining exposed, and some of the mining read-throughs there's been recently has been positive.
Speaker #8: So maybe you can talk a little about what you've learned from that integration. But I'm also curious if you could talk about what you're seeing for bookings opportunities for that business, given that MOGAS is about 50% mining exposed, and some of the mining re-throughs there's been recently have been positive.
Speaker #8: So maybe you can talk a little about what you've learned from that integration. But I'm also curious. If you could talk about what you're seeing for bookings opportunities for that business, given that MOGAS is about 50% mining exposed and some of the mining re-throughs there's been recently has been positive.
Speaker #5: Yeah, absolutely. So, we remain incredibly excited about the MOGAS transaction and the product we got. And as a reminder for folks, this is a critical service ball valve, kind of at the highest end in terms of the coatings and the technology.
Scott Rowe: Yeah, absolutely. So, you know, we're-- we remain incredibly excited about the Mogas transaction and the product we got. And as a reminder for folks, this is a critical service ball valve, kind of at the highest end in terms of, you know, the coatings and the technology, and it works in the harshest environments, and so it works in refining harsh chemicals. And then on mining, as part of the kind of that acid leaching process to extract, you know, minerals that would be, you know, Amy likes to say this, "Measured by the ounce and not the ton." And so, you know, these are the precious metals. And so, you know, we feel good about the end markets here. The bookings, I'll just say, quite frankly, in 2025, were slow to materialize.
R. Scott Rowe: Yeah, absolutely. So, you know, we're-- we remain incredibly excited about the Mogas transaction and the product we got. And as a reminder for folks, this is a critical service ball valve, kind of at the highest end in terms of, you know, the coatings and the technology, and it works in the harshest environments, and so it works in refining harsh chemicals. And then on mining, as part of the kind of that acid leaching process to extract, you know, minerals that would be, you know, Amy likes to say this, "Measured by the ounce and not the ton." And so, you know, these are the precious metals. And so, you know, we feel good about the end markets here. The bookings, I'll just say, quite frankly, in 2025, were slow to materialize.
Speaker #5: And it works in the harshest environments. And so it works in refining harsh chemicals. And then on mining, as part of kind of that acid leaching process to extract minerals that would be, as Amy likes to say, measured by the ounce and not the ton.
Speaker #5: And so, these are the precious metals. And so, we feel good about the end markets here. The bookings, I'll just say quite frankly, in 2025 were slow to materialize.
Speaker #5: The project funnel for 2026 looks really healthy, and so we've got good line of sight in terms of the ability to grow this business.
Scott Rowe: The project funnel for 2026 looks really healthy, and so we've got good line of sight in terms of the ability to grow this business. Just on the integration, you know, I, I would say, you know, we, we followed what I would call a very traditional playbook in terms of how to run an integration. We had our day one activities. We implemented the Flowserve Business System. We drove towards synergies, very much a programmatic way or approach to do this. And, you know, I, I couldn't be more pleased with the, the kind of the process and the results of the integration itself. And so, you know, everyone got paid on day one. We moved our systems conversions over very quickly. We got, you know, we got the business system in place. We did massive fixes on the shop floor.
R. Scott Rowe: The project funnel for 2026 looks really healthy, and so we've got good line of sight in terms of the ability to grow this business. Just on the integration, you know, I, I would say, you know, we, we followed what I would call a very traditional playbook in terms of how to run an integration. We had our day one activities. We implemented the Flowserve Business System. We drove towards synergies, very much a programmatic way or approach to do this. And, you know, I, I couldn't be more pleased with the, the kind of the process and the results of the integration itself. And so, you know, everyone got paid on day one. We moved our systems conversions over very quickly. We got, you know, we got the business system in place. We did massive fixes on the shop floor.
Speaker #5: Just on the integration, I would say we followed what I would call a very traditional playbook in terms of how to run the activities.
Speaker #5: Integration. We had our day one. We implemented the Flowserve Business System. We drove towards synergies. Very much a programmatic way or approach to do this.
Speaker #5: And I couldn't be more pleased with the kind of the process and the result of the integration itself. And so, everyone got paid on day one.
Speaker #5: We moved our systems conversions over very quickly. We got the business system in place. We did massive fixes on the shop floor. It looks completely different than what it did a year ago.
Scott Rowe: It looks completely different than what it did a year ago, and we're able to serve our customers at a much higher level. And so with all of that, you know, the margins have moved up significantly and progressively throughout the year, and we're confident we've got a really nice business as we go forward in 2026 and beyond.
R. Scott Rowe: It looks completely different than what it did a year ago, and we're able to serve our customers at a much higher level. And so with all of that, you know, the margins have moved up significantly and progressively throughout the year, and we're confident we've got a really nice business as we go forward in 2026 and beyond.
Speaker #5: And we're able to serve our customers at a much higher level. And so, with all of that, the margins have moved up significantly and progressively throughout the year.
Speaker #5: And we're confident we've got a really nice business as we go forward in 2026 and beyond.
Amy Schwetz: And Jose, one thing I might add on this one as well is, this is a technical sale in terms of the types of valves that Mogas is. As part of our Commercial excellence program, we have trained over 100 of our valve sales force members on the Mogas valves technically, and vice versa within the sales force that we brought with us from Mogas on our severe service applications and products. And so we really feel like going into 2026, we're well positioned in this area of the business.
Amy Schwetz: And Jose, one thing I might add on this one as well is, this is a technical sale in terms of the types of valves that Mogas is. As part of our Commercial excellence program, we have trained over 100 of our valve sales force members on the Mogas valves technically, and vice versa within the sales force that we brought with us from Mogas on our severe service applications and products. And so we really feel like going into 2026, we're well positioned in this area of the business.
Speaker #2: One thing I might add on this one—as Jose said as well—is this is a technical sale, in terms of the type of valves that MOGAS is. As part of our commercial excellence program, we have trained over 100 of our valve sales force members on the MOGAS valves, technically.
Speaker #2: And vice versa within the sales force that we brought with us from MOGAS on our severe service applications and products. And so we really feel like, going into 2026, we're well positioned in this area of the—
Speaker #2: business. Yeah.
Nathan Jones: Yeah, thanks, thanks for the color. I did also see there was a comment on the slides about you guys having fully mitigated tariff impacts in 2025, and I'm sure that wasn't easy. But with regards to the 2026 guide, I was curious if you guys could talk about what you're baking in for tariffs and how much of the higher metal prices is accounted for in the guide currently?
Nathan Jones: Yeah, thanks, thanks for the color. I did also see there was a comment on the slides about you guys having fully mitigated tariff impacts in 2025, and I'm sure that wasn't easy. But with regards to the 2026 guide, I was curious if you guys could talk about what you're baking in for tariffs and how much of the higher metal prices is accounted for in the guide currently?
Speaker #8: Thanks for the color. I did also see there was a comment on the slides about you guys having fully mitigated tariff impacts in 2025.
Speaker #8: And I'm sure that wasn't easy. But with regards to the 2026 guide, I was curious if you guys could talk about what you're baking in for tariffs, and how much of the higher metal prices is accounted for currently.
Speaker #5: Yeah. So
Scott Rowe: Yeah. So the team's done a really nice job in what I'll call an incredibly dynamic environment. And so our, you know, we learned a lot of lessons with our supply chain team in 2020 and 2021. We've been able to implement that and put that in place here to really, you know, be more nimble than ever before. And, you know, we were able to successfully, through the combination of repositioning the supply chain and driving some cost savings with supply chain, combined with pricing actions, to fully mitigate, you know, the impact in 2025. And, you know, I would just say the guide in 2026 is net of tariffs. And so, you know, we believe that, you know, we can continue to carry that momentum forward.
R. Scott Rowe: Yeah. So the team's done a really nice job in what I'll call an incredibly dynamic environment. And so our, you know, we learned a lot of lessons with our supply chain team in 2020 and 2021. We've been able to implement that and put that in place here to really, you know, be more nimble than ever before. And, you know, we were able to successfully, through the combination of repositioning the supply chain and driving some cost savings with supply chain, combined with pricing actions, to fully mitigate, you know, the impact in 2025. And, you know, I would just say the guide in 2026 is net of tariffs. And so, you know, we believe that, you know, we can continue to carry that momentum forward.
Speaker #5: An incredibly dynamic—the team's done a really nice job in what I'll call environment. And so we learned a lot of, for in the guide, lessons with our supply chain team in 2020 and 2021.
Speaker #5: We've been able to implement that and put that in place here to really be more nimble than ever before, and we were able to successfully, through the combination of repositioning the supply chain and driving some cost savings with supply chain, combined with pricing actions, to fully mitigate the impact.
Speaker #5: In 2025—and I would just say the guide in 2026 is net of tariffs. And so we believe that we can continue to carry that momentum forward.
Scott Rowe: We're doing that through pricing, and we continue to take supply chain actions. And, you know, hopefully, we won't be talking about tariffs for much longer, but, you know, I can't predict that, and so we'll continue to be nimble. We'll continue to be able to reposition, but we're in a really good place with the health of our supply chain, and our, just our team has done a really nice job working through an incredibly dynamic situation.
Speaker #5: We're doing that through chain actions, and hopefully, pricing. And if we continue to take supply, we won't be talking about tariffs for much longer, but I can't predict that.
R. Scott Rowe: We're doing that through pricing, and we continue to take supply chain actions. And, you know, hopefully, we won't be talking about tariffs for much longer, but, you know, I can't predict that, and so we'll continue to be nimble. We'll continue to be able to reposition, but we're in a really good place with the health of our supply chain, and our, just our team has done a really nice job working through an incredibly dynamic situation.
Speaker #5: And so we'll continue to be nimble. We'll continue to be able to reposition, but we're in a really good place with the health of our supply chain, and just our team has done a really nice job working through an incredibly dynamic environment.
Speaker #5: situation. Thanks for the
Nathan Jones: Thanks for the time.
Nathan Jones: Thanks for the time.
Speaker #8: time. Thank you.
Operator: Thank you. We'll take our next question from Brett Linzey with Mizuho.
Operator: Thank you. We'll take our next question from Brett Linzey with Mizuho.
Speaker #1: We'll take our next question from Brett Lindsay with Mizuho.
Speaker #9: Hey, good morning
Brett Linzey: Hey, good morning, all.
Brett Linzey: Hey, good morning, all.
Speaker #9: Hey, good morning. Hey, I wanted to come back to the
Scott Rowe: Hey, good morning, Brett.
R. Scott Rowe: Hey, good morning, Brett.
Speaker #6: Brett.
Brett Linzey: Hey, wanted to come back to the procurement issue in the quarter. Can you just talk about the nature of the dynamic and which component you might be referring to? And then, anything on the remedy actions in place that give you the better visibility this year?
Brett Linzey: Hey, wanted to come back to the procurement issue in the quarter. Can you just talk about the nature of the dynamic and which component you might be referring to? And then, anything on the remedy actions in place that give you the better visibility this year?
Speaker #9: Procurement issue in the quarter. Can you just talk about the nature of the dynamic, in which components you might be referring to? And then, anything on the remedy actions in place that give you the better visibility this—
Speaker #9: year?
Speaker #2: Yeah. I
Amy Schwetz: Yeah. I wouldn't necessarily call it a procurement issue. I'd call it, you know, delays in timing of receipts, not necessarily on one specific type of part or component. These things happen from time to time. When they happen at the end of the year, it's a little bit more painful than others. But the supply chain is functioning well, and we continue, when we see isolated incidents like this, we deploy expediters to our vendors pretty quickly, so we can get back on track.
Amy Schwetz: Yeah. I wouldn't necessarily call it a procurement issue. I'd call it, you know, delays in timing of receipts, not necessarily on one specific type of part or component. These things happen from time to time. When they happen at the end of the year, it's a little bit more painful than others. But the supply chain is functioning well, and we continue, when we see isolated incidents like this, we deploy expediters to our vendors pretty quickly, so we can get back on track.
Speaker #2: I wouldn't necessarily call it a procurement issue. I'd call it delays in timing of receipts, not necessarily on one specific type of part or component.
Speaker #2: These things happen from time to time. When they happen at the end, they're more painful than others. But the supply chain is functioning well. And as we continue incidents like this, we deploy through the year.
Speaker #2: It's a little bit more expeditors to our vendors pretty quickly, so we can get back on.
Speaker #2: track. Okay.
Brett Linzey: Okay, great. And then just to follow up on nuclear. So on slide 9, you, you gave the content opportunity is now 15 to 20% on, on new nucs. Where was that previously? And just, I, I guess, the spirit of the question is trying to take your Q3 commentary and some of the dollar figures, and where, you know, where that's moved to with the, with the content expansion.
Brett Linzey: Okay, great. And then just to follow up on nuclear. So on slide 9, you, you gave the content opportunity is now 15 to 20% on, on new nucs. Where was that previously? And just, I, I guess, the spirit of the question is trying to take your Q3 commentary and some of the dollar figures, and where, you know, where that's moved to with the, with the content expansion.
Speaker #9: Great. And then just a follow-up on nuclear. So, on slide 9, you gave the content opportunity is now 15 to 20 percent on new nukes.
Speaker #9: Where was that previously? And just, I guess, the spirit of the question is trying to take your Q3 commentary and some of the dollar figures and see where that's moved to with the content expansion.
Speaker #6: Yeah, absolutely. No, it's a good question. We'll just be super clear. And so in Q3, we said for a new nuclear reactor—and that's roughly the 1-gigawatt reactor.
Scott Rowe: Yeah, absolutely. No, it's a good question, and we'll just be super clear. And so in Q3, we said, for a new nuclear reactor, you know, and that's the roughly one gigawatt reactor, so the large ones, that Flowserve's historical content is roughly $100 million per reactor. Obviously, it depends on who the operator is and where it is geographically, but that's kind of our opportunity. Now, with Trillium Valves, we believe that the $100 million expands by 15% to 20%, and so now we're at $115 to $120 million per reactor. And so, you know, the other thing I would just add is, you know, we've done, on the valve side, we've done really well on our main steam isolation valve, which is a gate valve technology. We've done well on actuators also.
R. Scott Rowe: Yeah, absolutely. No, it's a good question, and we'll just be super clear. And so in Q3, we said, for a new nuclear reactor, you know, and that's the roughly one gigawatt reactor, so the large ones, that Flowserve's historical content is roughly $100 million per reactor. Obviously, it depends on who the operator is and where it is geographically, but that's kind of our opportunity. Now, with Trillium Valves, we believe that the $100 million expands by 15% to 20%, and so now we're at $115 to $120 million per reactor. And so, you know, the other thing I would just add is, you know, we've done, on the valve side, we've done really well on our main steam isolation valve, which is a gate valve technology. We've done well on actuators also.
Speaker #6: So the large ones that Flowserve's historical content is roughly $100 million per reactor. Obviously, it depends on who the operator is and where it is geographically, but that's the opportunity now with Trillium Valves.
Speaker #6: We believe that the $100 million kind of number expands by 15 to 20 percent. And so now we're at $115 to $120 million per reactor.
Speaker #6: And so the other thing I would just add is, on the valve side, we've done really well on our mainstream isolation valve, which is gate valve technology.
Speaker #6: We've done well on actuators also. With Trillium, we pick up essentially four new products, and so we get a triple offset butterfly valve that's nuclear certified.
Scott Rowe: With Trillium, we pick up essentially four new products. We get a triple offset butterfly valve that's nuclear certified, a check valve, a different type of actuator, and a control valve. We're pretty excited to round out that portfolio, and that's what increases our content. This is something that our team is really excited to get ahold of, get in front of the right customers, and grow our nuclear opportunity.
R. Scott Rowe: With Trillium, we pick up essentially four new products. We get a triple offset butterfly valve that's nuclear certified, a check valve, a different type of actuator, and a control valve. We're pretty excited to round out that portfolio, and that's what increases our content. This is something that our team is really excited to get ahold of, get in front of the right customers, and grow our nuclear opportunity.
Speaker #6: We get a check valve, we get a different type of actuator, and we get a control valve. And so we're pretty excited to round out that portfolio.
Speaker #6: And that's what increases our content, and so this is something that our team is really excited to get a hold of and get in front of the right customers, and grow our nuclear opportunity.
Speaker #9: Thanks for the detail.
Brett Linzey: Thanks for the detail.
Brett Linzey: Thanks for the detail.
Speaker #1: Thank you. We'll take our final question from Nathan Jones with Stifel.
Operator: Thank you. We'll take our final question from Nathan Jones with Stifel.
Operator: Thank you. We'll take our final question from Nathan Jones with Stifel.
Speaker #4: Hi, this is Andres on for Nathan Jones. Thanks for taking my questions. Just regarding 80/20—you talked a little bit about this earlier, but maybe after two or three years of 80/20 implementation, can you maybe talk about successes and what the company still needs to improve?
Nathan Jones: Hi, this is Andres on for Nathan Jones. Thanks for taking my questions. Just regarding 80/20, you talked a little bit about this earlier, but maybe, after two, three years of 80/20 implementation, can you maybe talk about successes and where the company still needs to improve? You made note of a couple improvements earlier, just to round it about.
Nathan Jones: Hi, this is Andres on for Nathan Jones. Thanks for taking my questions. Just regarding 80/20, you talked a little bit about this earlier, but maybe, after two, three years of 80/20 implementation, can you maybe talk about successes and where the company still needs to improve? You made note of a couple improvements earlier, just to round it about.
Speaker #4: You may know of a couple of improvements earlier, just to round it out.
Speaker #6: Sure. Yeah, 80/20 is a great thing to talk about. And we're incredibly excited about the success that we've achieved on 80/20. And we're now kind of going into the—we're in our third year.
Scott Rowe: Sure. Yeah, 80/20 is a great thing to talk about, and, you know, we're incredibly excited about the success that we've achieved on 80/20. And, you know, we're now kind of going into the, you know, we're in our third year. It'll be the second kind of full year of this, but all of our product business units are now fully on the 80/20 program. We've seen incredible success on the reduction of complexity, a more focused organization. We're seeing the margins come through, and we're also starting to see growth where we focus on our best products and our best customers. And in the Q3 earnings deck, we put some numbers out on one of our business units, actually, the industrial pumps, that was our initial one.
R. Scott Rowe: Sure. Yeah, 80/20 is a great thing to talk about, and, you know, we're incredibly excited about the success that we've achieved on 80/20. And, you know, we're now kind of going into the, you know, we're in our third year. It'll be the second kind of full year of this, but all of our product business units are now fully on the 80/20 program. We've seen incredible success on the reduction of complexity, a more focused organization. We're seeing the margins come through, and we're also starting to see growth where we focus on our best products and our best customers. And in the Q3 earnings deck, we put some numbers out on one of our business units, actually, the industrial pumps, that was our initial one.
Speaker #6: It'll be the second kind of full year of this. But all of our product business units are now fully on the 80/20 program. We've seen incredible success on the reduction of complexity, and a more focused organization.
Speaker #6: We're seeing the margins come through. And we're also starting to see growth where we focus on our best products and our best customers. And in the Q3 earnings deck, we put some numbers out on one of our business units, actually the industrial pumps—that was our initial one.
Scott Rowe: And so, just as a reminder, you know, we showed 150 basis points of margin improvement with industrial pumps attributed to 80/20. We saw a 45% SKU reduction. We saw a 21% increase in that target selling. And I would say that that is represented across all of our business units, and, you know, we certainly expect to see similar wins as we go through the 2026 program. You know, companies that do this incredibly well would see roughly 100 basis points of margin improvement a year, you know, over kind of a 4- to 5-year period. And so I think we're fully on track. We've had a little bit more success in 2025, but I feel like we're gonna be in a great place to continue our efforts.
R. Scott Rowe: And so, just as a reminder, you know, we showed 150 basis points of margin improvement with industrial pumps attributed to 80/20. We saw a 45% SKU reduction. We saw a 21% increase in that target selling. And I would say that that is represented across all of our business units, and, you know, we certainly expect to see similar wins as we go through the 2026 program. You know, companies that do this incredibly well would see roughly 100 basis points of margin improvement a year, you know, over kind of a 4- to 5-year period. And so I think we're fully on track. We've had a little bit more success in 2025, but I feel like we're gonna be in a great place to continue our efforts.
Speaker #6: And so, just as a reminder, we showed 150 basis points of margin improvement with industrial pumps, attributed to 80/20. We saw a 45% SKU reduction.
Speaker #6: We saw a 21% increase in that target selling, and I would say that that is representative across all of our business units. And we, as we go through, certainly expect to see similar 2026 program.
Speaker #6: Companies that do this incredibly well would see roughly 100 basis points of margin improvement a year over kind of a four- to five-year period.
Speaker #6: I think we're fully on track. We've had a little bit more success in 2025, but I feel like— and so we're going to be in a great place to continue our efforts.
Scott Rowe: The other thing I'd just say is, as we reduce complexity of the products, it just allows us to do things differently operationally, potentially reduce our roofline over time and continue to reduce cost and the overall Flowserve. So this has been, quite frankly, an unlock for us and we continue to be excited about the progress that we can make in 2026 and beyond.
Speaker #6: And the other thing I would just say is, as we reduce complexity of the products, it just allows us to do things differently operationally, potentially reduce our roofline over time, and continue to reduce cost.
R. Scott Rowe: The other thing I'd just say is, as we reduce complexity of the products, it just allows us to do things differently operationally, potentially reduce our roofline over time and continue to reduce cost and the overall Flowserve. So this has been, quite frankly, an unlock for us and we continue to be excited about the progress that we can make in 2026 and beyond.
Speaker #6: And the overall Flowserve. And so this has been, quite frankly, an unlock for us, and we continue to be excited about the progress that we can make in 2026.
Speaker #6: beyond.
Speaker #4: Awesome. Thank you very much for that context. And then just on the balance sheet—obviously, it still remains flexible. After the deal with—
Nathan Jones: Awesome. Thank you very much for that context. And then just, just on the balance sheet, obviously, you still remain flexible after the deal with capacity for further capital allocation. Is the focus on just, maybe further M&A or the integration of Trillium in the, the short term?
Nathan Jones: Awesome. Thank you very much for that context. And then just, just on the balance sheet, obviously, you still remain flexible after the deal with capacity for further capital allocation. Is the focus on just, maybe further M&A or the integration of Trillium in the, the short term?
Speaker #4: Capacity for further capital allocation—is the focus on just maybe further M&A, or the integration of Trillium in the short term?
Speaker #4: term?
Speaker #2: Yeah, so we do feel like we're in a great—
Amy Schwetz: Yeah. So we do feel like we're in a great place from a balance sheet health perspective, about 1x net levered at the end of the year. So it does give us an opportunity with the substantial cash flow generation that we have and expect to continue to have to look for ways to allocate capital to create value from our shareholders. I think the last six months has been a really good roadmap of how we think about capital allocation. We've been relatively balanced, but in 2025, we saw a really great opportunity to invest in Flowserve, and so we bought back about 250 million shares at an attractive valuation. And you also saw us be active in the M&A space.
Amy Schwetz: Yeah. So we do feel like we're in a great place from a balance sheet health perspective, about 1x net levered at the end of the year. So it does give us an opportunity with the substantial cash flow generation that we have and expect to continue to have to look for ways to allocate capital to create value from our shareholders. I think the last six months has been a really good roadmap of how we think about capital allocation. We've been relatively balanced, but in 2025, we saw a really great opportunity to invest in Flowserve, and so we bought back about 250 million shares at an attractive valuation. And you also saw us be active in the M&A space.
Speaker #2: From a balance sheet health perspective, about one-time net levered at the end of the year. And so it does give us an opportunity with the substantial cash flow to continue to have to look for ways—generation that we have and expect—to allocate capital to create value for our shareholders.
Speaker #2: I think the last six months has been a really good roadmap of how we think about balanced, but opportunity to invest in Flow in 2025, we serve.
Speaker #2: And so we bought back about 250 million shares at an attractive valuation. And you also saw us be active in the small tuck-in that we had with Green Ray, or the slightly larger Trillium announcement from today. We think that M&A can play a role in growth of the M&A space, the business.
Speaker #2: And so we bought back about 250 million shares at an attractive valuation. And you also saw us be active in the small tuck-in that we had with Green Ray, or the slightly larger Trillium announcement from today. We think that M&A can play a role in the growth of the M&A space.
Amy Schwetz: And so whether it's the small tuck-in that we had with Greenray or the slightly larger Trillium announcement from today, we think that M&A can play a role in growth of the business. And just to remind everyone what our filters are when we look at that: One, it's gotta fit the strategy. And we look at Greenray from an aftermarket perspective and the ability to expand that business. And you look at Trillium in terms of the diverse markets that they serve, including a really heavy emphasis on power, and both tick the boxes there. And then lastly, you know, we're gonna do this in a way that financially makes sense. So we expect accretion to margins and cash flow, and we're gonna protect our balance sheet going forward.
Amy Schwetz: And so whether it's the small tuck-in that we had with Greenray or the slightly larger Trillium announcement from today, we think that M&A can play a role in growth of the business. And just to remind everyone what our filters are when we look at that: One, it's gotta fit the strategy. And we look at Greenray from an aftermarket perspective and the ability to expand that business. And you look at Trillium in terms of the diverse markets that they serve, including a really heavy emphasis on power, and both tick the boxes there. And then lastly, you know, we're gonna do this in a way that financially makes sense. So we expect accretion to margins and cash flow, and we're gonna protect our balance sheet going forward.
Speaker #2: Remind everyone what our filters are when we look at that. One, it's got to fit the strategy. And we look at Green Ray from an aftermarket perspective and the ability—and so whether it's Trillium, in terms of the diverse, to expand that business.
Speaker #2: Markets that they serve, including a really heavy emphasis on power. And you look at it, and both tick the boxes there. And then lastly, we're going to do this in a way that financially makes sense.
Speaker #2: So we expect accretion to margins and cash flow. And we're going to protect our balance sheet going forward. But we're excited about the ability to really continue to broaden the product portfolio, to continue to make our end markets very resilient, and using M&A to do that.
Amy Schwetz: But we're excited about the ability to really continue to broaden the product portfolio, to continue to make our end markets very resilient, and using M&A to do that.
Amy Schwetz: But we're excited about the ability to really continue to broaden the product portfolio, to continue to make our end markets very resilient, and using M&A to do that.
Speaker #2: that.
Nathan Jones: That's great context. Thank you very much.
Nathan Jones: That's great context. Thank you very much.
Speaker #4: That's great context. Thank you very much.
Operator: That will conclude our question and answer session. At this time, I'd like to turn the call over to Brian Ezell for any additional or closing remarks.
Operator: That will conclude our question and answer session. At this time, I'd like to turn the call over to Brian Ezell for any additional or closing remarks.
Speaker #1: That will conclude our Q&A session at this time. I'd like to turn the call over to Brian Ezzell for any additional or closing remarks.
Speaker #1: remarks.
Speaker #4: Yeah. Thank you to everyone
Scott Rowe: Yeah, thank you to everyone for joining the call today. One item I'll note, we are planning to host an Investor Day later this year to provide further insight on our strategic and financial plans. We're gonna provide more information soon about that event, so you can plan accordingly. In the meantime, if you have any questions on Q4 results, please reach out to the investor relations team. And with that, we appreciate the time, and have a great day.
R. Scott Rowe: Yeah, thank you to everyone for joining the call today. One item I'll note, we are planning to host an Investor Day later this year to provide further insight on our strategic and financial plans. We're gonna provide more information soon about that event, so you can plan accordingly. In the meantime, if you have any questions on Q4 results, please reach out to the investor relations team. And with that, we appreciate the time, and have a great day.
Speaker #4: Thank you for joining the call today. One item I'll note: we are planning to host an investor day later this year to provide further insight on our strategic and financial plans.
Speaker #4: We’re going to provide more information soon about that. In the meantime, if you have any questions, reach out to our relations team. And with that, we appreciate the time and have a great day.
Speaker #1: That will conclude today's call. We appreciate your
Operator: That will conclude today's call. We appreciate your participation.
Operator: That will conclude today's call. We appreciate your participation.
