Flowserve (FLS) Q3 2024 earnings summary

Executive summary

• Q3 2024 bookings reached $1.2B, up 12.7% year-over-year, with strong aftermarket and record 3D strategy contributions; revenue grew 3.5% to $1.13B, and adjusted EPS rose 24% to $0.62, despite a $0.07 discrete charge.

• Operating cash flow surged 121% to $178M, with free cash flow to adjusted net earnings at 189%.

• MOGAS Industries acquisition completed, expected to add $200M in annual revenue, deliver $15M in cost synergies by year two, and be EBITDA margin accretive.

• Backlog stands at $2.8B, up 3.7% sequentially, positioning for 2025 growth.

• Progress made on operational and portfolio excellence programs, targeting 100–200 bps margin improvement by 2027.

Financial highlights

• Q3 sales: $1.13B (+3.5% year-over-year); nine months: $3.38B (+7.0%).

• Adjusted gross margin: 32.4% (+270 bps); reported gross margin: 31.5% (+250 bps); adjusted operating margin: 11.1% (+240 bps); reported operating margin: 9.1% (+270 bps).

• Adjusted EPS: $0.62 (+24%); reported EPS: $0.44 (+26%).

• Cash from operations: $178M in Q3; $228M for nine months.

• Book-to-bill ratio: 1.06 for Q3, 1.03 year-to-date; backlog at $2.8B.

Outlook and guidance

• Reaffirmed full-year adjusted EPS guidance of $2.60–$2.75, likely to finish near the midpoint.

• Revenue growth expected between 4.0% and 6.0% for the full year; 2024 revenue guidance midpoint at $4.5B, targeting $5.0B by 2027.

• Margin expansion and growth targeted through 2027, with adjusted operating margin guidance for 2024 at 11.5%+ and 14–16% by 2027.

• Full-year book-to-bill expected to exceed 1.0; backlog supports 2025 growth.

• Adjusted EPS guidance excludes realignment charges, MOGAS acquisition, and certain discrete items.