Executive Summary

Q3 delivered strong margin expansion and EPS despite slightly softer revenue: adjusted EPS $0.90 (+45% YoY) on sales of $1.174B (+3.6% YoY); adjusted operating margin rose 370 bps to 14.8% and adjusted gross margin rose 240 bps to 34.8% .
Mixed vs Street: EPS beat S&P consensus ($0.90 vs $0.80*), while revenue missed ($1.174B vs $1.206B*); EBITDA modestly above consensus ($184.1M* vs $181.2M*) as mix and cost actions offset OE softness (aftermarket resilience) [GetEstimates].
Guidance raised again: FY25 adjusted EPS increased to $3.40–$3.50 (from $3.25–$3.40), while total sales growth trimmed to +4–5% (organic ~2%) and capex lowered to ~$75M .
Strategic catalysts: announced divestiture of legacy asbestos liabilities (expected to close 4Q25; improves FCF by ~~$15–$20M annually) and robust nuclear bookings (~~$140M in Q3) tied to AI/data center-driven power demand .

What Went Well and What Went Wrong

What Went Well

Margin execution: Adjusted operating margin reached 14.8% (+370 bps YoY); adjusted gross margin 34.8% (+240 bps YoY), reflecting Flowserve Business System and 80/20 actions .
Aftermarket strength: Aftermarket bookings rose 6.3% YoY to $653.1M; Q3 marked the sixth consecutive quarter of >$600M aftermarket bookings, supporting resilience and mix .
Nuclear and power momentum: Record ~$140M nuclear awards drove 23% YoY power bookings growth; management highlighted decades-long domain expertise and high barriers to entry underpinning attractive margins .

What Went Wrong

Top-line vs estimates: Revenue of $1.174B missed S&P consensus ($1.206B*) on softer original equipment/project timing, especially in Middle East energy; OE bookings -4.9% YoY [GetEstimates].
Segment mix pressure in Flow Control: FCD segment operating margin dipped to 12.3% from 13.2% YoY despite higher sales; SG&A and integration dynamics weighed, though sequential improvement noted with MOGAS .
Reported volatility from one-offs: GAAP diluted EPS $1.67 included material non-operating items (e.g., merger termination payment credit in other income and discrete tax) that complicate comp; adjusted EPS more indicative of core ($0.90) .

Financial Results

Core P&L vs prior periods

Metric	Q3 2024	Q2 2025	Q3 2025
Revenue ($USD Millions)	$1,133.1	$1,188.1	$1,174.4
Adjusted EPS ($)	$0.62	$0.91	$0.90
Adjusted Gross Margin (%)	32.4%	34.9%	34.8%
Adjusted Operating Margin (%)	11.1%	14.6%	14.8%

Notes: Adjusted metrics per company reconciliation tables.

Q3 2025 Actual vs S&P Global Consensus

Metric	Actual	Consensus
Revenue ($USD Millions)	$1,174.4	$1,206.1*
Adjusted EPS ($)	$0.90	$0.80*
EBITDA ($USD Millions)	$184.1*	$181.2*

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

Segment performance (Q3 2025 vs Q3 2024)

Segment	Sales Q3’24 ($M)	Sales Q3’25 ($M)	Seg. OI Q3’24 ($M)	Seg. OI Q3’25 ($M)	Seg. OI % Q3’24	Seg. OI % Q3’25
Flowserve Pumps Division (FPD)	782.1	800.3	109.3	134.9	14.0%	16.9%
Flow Control Division (FCD)	353.1	377.4	46.7	46.4	13.2%	12.3%

KPIs and balance sheet

KPI	Q3 2024	Q2 2025	Q3 2025
Total Bookings ($M)	$1,203.6	$1,073.9	$1,213.0
Aftermarket Bookings ($M)	$614.6	$620.6	$653.1
Original Equipment Bookings ($M)	$589.0	$453.3	$559.9
Backlog ($M)	$2,783.8	$2,853.2	$2,896.1
Cash from Operations ($M)	$178.5	$154.1	$401.8

Additional items: Returned $173M to shareholders in Q3 (dividends + repurchases) and repurchased ~$145M of shares; continued repurchases into October for an additional ~$55M .

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Organic Sales Growth	FY2025	+3% to +4%	~2%	Lowered
FX Translation Impact	FY2025	~0 bps	~+50 bps	Raised
Total Sales Growth	FY2025	+5% to +6%	+4% to +5%	Lowered
Adjusted EPS ($)	FY2025	$3.25–$3.40	$3.40–$3.50	Raised
Net Interest Expense ($M)	FY2025	~70	~70	Maintained
Adjusted Tax Rate	FY2025	~20%	~20%	Maintained
Capital Expenditures ($M)	FY2025	$80–$90	~75	Lowered
Divestment of Asbestos Liabilities	4Q25 close expected	N/A	Expect ~$15–$20M annual FCF improvement; ~$199M cash contribution; one-time loss ~$135M excluded from adjusted EPS	New item

Earnings Call Themes & Trends

Topic	Previous Mentions (Q1 & Q2 2025)	Current Period (Q3 2025)	Trend
Aftermarket strength	Record Q1 aftermarket nearly $690M; resilience emphasized	Sixth straight >$600M quarter; $653.1M bookings; capture rate improving	Positive, sustained
Nuclear/power demand	Q1: >$100M nuclear awards; power bookings +45% YoY	~$140M nuclear awards; power bookings +23% YoY; content opportunity $10B over decade; high barriers to entry	Accelerating
Tariffs & pricing	Q1: Monitoring tariff impacts; guidance incorporates tariffs	Multiple U.S. price increases; price-cost neutral to slightly positive in run-rate business	Managed headwind
Middle East energy projects	Q2: Energy OE bookings soft YoY; backlog healthy	2025 at five-year low; expect improvement into 2026 as project timing normalizes	Near-term soft, medium-term recovery
80/20 & FBS execution	Q2: 80/20 and commercial excellence driving margins	SKU rationalization, portfolio pruning, and margin gains; FTD +410 bps seq margin; operating margins at LT target early	Margin momentum
MOGAS integration	Q2: Transitional costs; synergy path outlined	Accretive to FCD margins; modules shipped; focus now on growth and synergies	Inflecting positively
Capital allocation	Q2: $266M termination fee; raised EPS guide	Asbestos divestiture simplifies structure; share buybacks ($145M in Q3; +$55M in Oct)	Greater flexibility

Management Commentary

“Flowserve delivered another quarter of exceptional performance… led by the strength of our aftermarket franchise and a resurgent Power and Nuclear end market fueled by growth of AI, increasing data center development, and broader electrification trends.” – Scott Rowe, CEO .
“We are raising our adjusted EPS guidance range for the second time this year to $3.40 to $3.50… highlighting consistent execution of our strategy.” – CEO .
“Adjusted operating margins increased 370 basis points to 14.8%… the second consecutive quarter within our 14–16% long-term targeted range, well ahead of 2027 expectations.” – CFO Amy Schwetz .
“The divestiture [of asbestos liabilities] simplifies our capital structure, reduces volatility, and improves our annual cash flow by approximately $15–$20 million.” – CFO .

Q&A Highlights

Nuclear profitability and market share: Management underscored high barriers to entry, existing content in ~75% of ~400 reactors, and expectation to be market leader in valve and pump content; $10B decade-long opportunity excludes China given localization .
Pricing/tariffs: Multiple U.S. price hikes in 2025; run-rate aftermarket pricing “sticky”; aiming for neutral-to-positive price/cost despite tariff noise .
Middle East energy: OE project bookings at a five-year low in 2025 due to timing; funnel supportive of recovery in 2026+ .
Free cash flow and working capital: Q3 CFO of $402M benefited from merger termination payment; excluding that, FCF conversion 174%; company targeting ~100% FCF for year with continued working capital improvement under FBS/80-20 .
MOGAS integration: Margins accretive in Q3; modules shipped; focus on growth and synergies with FBS embedded .

Estimates Context

Q3 2025 vs S&P Global: EPS beat ($0.90 vs $0.80*), revenue miss ($1.174B vs $1.206B*), EBITDA beat ($184.1M* vs $181.2M*). Guidance lift suggests upward EPS estimate revisions despite modest revenue trim (organic growth now ~2%) [GetEstimates].
Near-term Street setup: Consensus looks for Q4 revenue ~$1.263B* and EPS ~$0.95*; margin trajectory and backlog conversion (offset by longer nuclear lead times) are key to delivery [GetEstimates].

Values marked with * retrieved from S&P Global.

Key Takeaways for Investors

Mix-led margin story intact: Aftermarket and 80/20/FBS actions are expanding margins ahead of LT targets; adjusted OI at 14.8% despite project timing headwinds .
Nuclear is a multi-year growth driver: Record awards, high barriers, and attractive margins position FLS to capture outsized share as AI/data centers/electrification expand power demand .
Near-term top-line variance manageable: Revenue slightly below consensus on OE/project timing; backlog and aftermarket support stable execution while Middle East energy recovers into 2026 .
Higher FY EPS with disciplined capex: FY25 adjusted EPS raised to $3.40–$3.50; capex trimmed to ~$75M and tax/interest unchanged—providing operating leverage and FCF support .
Balance sheet/capital allocation improving: Asbestos divestiture to reduce volatility and improve annual FCF by ~$15–$20M; active buybacks enhance per-share growth .
Watch drivers for the next print: Sequential margin sustainment in FCD post-MOGAS, aftermarket capture rate, pricing vs tariffs, and booking cadence in nuclear/power and Middle East energy .
Stock narrative: Expect focus on durable margin expansion and nuclear optionality; any incremental nuclear awards or backlog conversion improvements are likely positive catalysts, while renewed energy OE slippage would be a risk .

FLOWSERVE CORP (FLS)·Q3 2025 Earnings Summary