Executive Summary

Strong start to 2025: revenue $1.14B (+5%), adjusted EPS $0.72 (+24%), adjusted operating margin 12.8% (+190 bps), and record aftermarket bookings (~$689M); book-to-bill ~1.07x, backlog $2.9B .
Revenue and “Primary EPS” topped S&P Global consensus; Q1 revenue $1.145B vs $1.110B est., Primary EPS $0.62 vs $0.60 est.; adjusted EPS of $0.72 drove the beat on execution and mix benefits in Pumps (FPD) and 80/20 actions in both segments (values with asterisks from S&P Global)* .
2025 outlook reaffirmed: total sales growth +5% to +7%, adjusted EPS $3.10–$3.30, net interest ~$70M, tax ~21%, capex $80–$90M; framework embeds tariff impacts and mitigating actions .
Potential stock drivers: sustained nuclear/power momentum (3rd consecutive quarter >$100M nuclear awards), record aftermarket, ongoing margin expansion, and tariff mitigation/pricing offset; watch for 2H tariff mix pressure (more in valves/FCD) and backlog repricing cadence .

What Went Well and What Went Wrong

What Went Well
- Aftermarket strength and 3D strategy: record aftermarket bookings (~$690M), 3D bookings 31% of awards, nuclear >$100M for a third straight quarter, power bookings +45% YoY .
- Margin expansion and execution: adjusted gross margin 33.5% (+180 bps) and adjusted operating margin 12.8% (+190 bps) on favorable mix, productivity, and early 80/20 benefits; FPD adjusted operating margin 17.7% (+280 bps) .
- Pricing and backlog agility: executed annual price increase in Jan and targeted tariff-related increases in Mar; using change orders to reprice affected projects in backlog; visibility to full mitigation of $90–$100M gross tariff impact over 2025 .
What Went Wrong
- Cash flow headwinds in Q1: cash from operations was a $49.9M use, driven by timing of receivables, incentive payouts, and working capital; management expects improvement through the year .
- FCD margin pressure: FCD reported segment operating margin 8.6% (vs 10.8% LY), with tariff exposure relatively higher in valves; adjusted FCD operating margin 12.2% (+110 bps YoY) but management flagged more 2H tariff pressure in valves vs pumps .
- Tariff uncertainty and mix: management cited a dynamic macro/tariff environment with potential for 2H demand effects and mix headwinds; expects Q2 to be similar/slightly better than Q1 with 2H weighted earnings .

Financial Results

Metric	Q1 2024	Q4 2024	Q1 2025
Revenue ($USD Millions)	$1,087.5	$1,180.3	$1,144.5
Diluted EPS (GAAP)	$0.56	$0.59	$0.56
Adjusted EPS ($)	$0.58	$0.70	$0.72
Gross Margin (%)	31.2%	31.5%	32.3%
Adjusted Gross Margin (%)	31.7%	32.8%	33.5%
Operating Margin (%)	10.4%	10.6%	11.5%
Adjusted Operating Margin (%)	10.9%	12.6%	12.8%
Cash from Operations ($USD Millions)	$62.3	$197.3	$(49.9)

Segment performance (Q1 2025 vs Q1 2024):

Segment	Q1 2024	Q1 2025
FPD Bookings ($M)	$703.5	$852.9
FPD Sales ($M)	$769.4	$783.1
FPD Gross Margin (%)	32.2%	34.3%
FPD Segment Op Margin (%)	14.4%	17.4%
FPD Adjusted Op Margin (%)	14.9%	17.7%
FCD Bookings ($M)	$341.1	$376.0
FCD Sales ($M)	$320.5	$364.1
FCD Gross Margin (%)	28.9%	27.5%
FCD Segment Op Margin (%)	10.8%	8.6%
FCD Adjusted Op Margin (%)	11.1%	12.2%
FPD Backlog ($M)	—	$2,018.7
FCD Backlog ($M)	—	$889.4

KPI trends:

KPI	Q3 2024	Q4 2024	Q1 2025
Total Bookings ($M)	~$1,200	$1,175.3	$1,226.4
Aftermarket Bookings ($M)	~$615	$618.1	~$688.6
Book-to-Bill (x)	~1.06x	~1.00x	~1.07x
Nuclear Awards ($)	>$100M	>$110M	>$100M
Backlog ($B)	~2.8	2.7896	2.9029

Estimate comparison (S&P Global consensus):

Metric	S&P Consensus	Actual
Revenue ($USD Millions) – Q1 2025	$1,110.2*	$1,144.5
Primary EPS – Q1 2025	$0.60*	$0.62* (Primary EPS); Adjusted EPS $0.72

Values with asterisk (*) retrieved from S&P Global.

Notes on non-GAAP: Q1 adjustments included realignment, MOGAS acquisition/integration, purchase accounting amortization, discrete items (pension-related share comp/settlement), and below-the-line FX ($11.4M; ~$0.07 EPS), bridging GAAP $0.56 to adjusted $0.72 .

Guidance Changes

Metric	Period	Previous Guidance (2/18/2025)	Current Guidance (4/29/2025)	Change
Organic Sales Growth	FY 2025	+3% to +5%	+3% to +5%	Maintained
Impact from Acquisitions	FY 2025	~+300 bps	~+300 bps	Maintained
FX Translation Impact	FY 2025	~(-100) bps	~(-100) to 0 bps	Maintained/Range widened
Total Sales Growth	FY 2025	+5% to +7%	+5% to +7%	Maintained
Adjusted EPS	FY 2025	$3.10–$3.30	$3.10–$3.30	Maintained
Net Interest Expense	FY 2025	~$70M	~$70M	Maintained
Adjusted Tax Rate	FY 2025	~21%	~21%	Maintained
Capital Expenditures	FY 2025	$80–$90M	$80–$90M	Maintained

Management reiterated that guidance assumes current tariff rates with mitigation actions, steady flow control demand, and 2H-weighted earnings .

Earnings Call Themes & Trends

Topic	Previous Mentions (Q3’24 and Q4’24)	Current Period (Q1’25)	Trend
Aftermarket capture	Two consecutive quarters >$600M; focus on speed and installed base capture	Record ~$690M; sustained weekly run-rate strength	Improving
Nuclear/power	Power funnel +20% YoY; nuclear >$100M; data center-driven power demand	Power bookings +45% YoY; nuclear >$100M third consecutive quarter	Improving
80/20 (CORE)	Launch across units; target 100–200 bps by 2027	Margin uplift in Q1; SKU reduction, price discipline; ≥50 bps FY gross margin benefit expected	Improving
Tariffs	Playbook in place; confident in managing scenarios	Gross impact $90–$100M; price, sourcing, and manufacturing shifts to mitigate; 2H timing mismatch, more in valves	At risk near term; mitigations active
Pricing power	Discipline improving; commercial excellence planned	Annual increase (Jan) plus targeted increases (Mar); stickiness expected; change orders on backlog	Improving
Working capital/cash	Strong Q4 cash; target 85%+ conversion	Q1 use of cash driven by timing; expect improvement and ~90%+ FY conversion	Seasonal dip; improving path
FCD vs FPD margins	FPD at/above LT range; FCD improving but mixed	FPD adjusted OI margin 17.7%; FCD adjusted OI margin 12.2% but higher tariff exposure	Mixed; FPD stronger
Regional/project funnel	ME oil & gas strong; Europe chemicals soft	Funnel elevated in energy, chemical, power; limited deferrals; chemicals still soft	Stable
Decarbonization	3D bookings record; CCS/LNG activity	CCS contract activity (e.g., ADNOC seals) and ongoing decarb pipeline	Stable/Positive

Management Commentary

“Bookings grew 18%…Revenue increased 5% and adjusted gross margins expanded 180 bps…Adjusted EPS was $0.72…We remain confident…[but] the current tariff environment introduces a new dynamic” — CEO Scott Rowe .
“Based on tariff rates known today, we estimate the annualized gross impact…between $90 million and $100 million…we have a number of levers…pricing actions…sourcing shifts…optimize the location of our work” .
“Adjusted operating margin of 12.8%…driven by higher sales volume…robust FPD margins on favorable mix and accelerating 80/20 benefits” — CFO Amy Schwetz .
“We repurchased $21 million…in Q1 and an additional $32 million in April…average cost $45 per share” .
“We are reaffirming our earnings guidance…organic growth of 3% to 5% and adjusted EPS of $3.10 to $3.30” .

Q&A Highlights

Tariffs and pricing: Management moved early with targeted price increases and expects to reprice backlog via change orders; believes pricing could offset roughly half of gross tariff impact, with supply chain/manufacturing shifts covering the rest; timing mismatch more in Q3–Q4, skewed to FCD .
Aftermarket durability: Weekly run-rate remains elevated; $690M Q1 aftermarket included a one-time $50M nuclear order, but management remains confident the ~$600M cadence is sustainable .
Segment cadence: Q2 expected similar/slightly better than Q1; 2H earnings weighted; mix headwinds in Q2 and more tariff pressure in 2H, especially valves .
MOGAS integration: Slight bookings softness in projects but strong aftermarket at high margins; synergy ramp a 1H/2H story; accretive to earnings in Q1 and expected to accelerate through 2025 .
Project funnel visibility: Elevated in power/energy/chemical; most near-term projects at/after FID, limiting cancellation risk; nuclear pipeline particularly long-dated with multi-quarter visibility .

Estimates Context

Q1 2025: Revenue beat ($1,144.5M vs $1,110.2M est.) and Primary EPS beat ($0.62 vs $0.60 est.). Adjusted EPS reported at $0.72, reflecting non-GAAP add-backs including below-the-line FX (~$0.07) (S&P consensus values with asterisks)*.
Q2 2025 setup: Management guided Q2 similar/slightly better than Q1 with 2H weighting; mix and tariff timing temper incremental margins vs Q1 .
Values with asterisk (*) retrieved from S&P Global.

Key Takeaways for Investors

Sustained order momentum (book-to-bill >1.0) with record aftermarket and resilient run-rate business underpin visibility, while nuclear/power exposure provides structural tailwinds .
Margin expansion is broad-based and process-driven (Flowserve Business System, 80/20), with FPD already at LT targets and FCD improving despite higher tariff exposure; watch FCD 2H margin cadence .
Tariff risk is real but mitigatable: pricing, sourcing, and footprint provide offset levers; some 2H mismatch likely, especially in valves .
Cash conversion should improve after Q1 seasonal/timing headwinds; management targets ~90%+ FY cash flow to adjusted net earnings .
2025 guidance reaffirmed with potential FX tailwind if USD remains weaker; management tone confident but vigilant on macro/tariffs .
Tactical: Positive setup near term on execution/margins and aftermarket resiliency; monitor 2H tariff/mix impact and FCD margin progress as the key swing factors .

Footnote: Values with asterisk (*) retrieved from S&P Global.

FLOWSERVE CORP (FLS)·Q1 2025 Earnings Summary