Sign in

You're signed outSign in or to get full access.

FC

FLOWSERVE CORP (FLS)·Q4 2024 Earnings Summary

Executive Summary

  • Q4 2024 delivered solid execution: sales of $1.180B (+1% YoY), adjusted operating margin 12.6% (+210 bps YoY), and adjusted EPS of $0.70; bookings were $1.175B with aftermarket strength ($618M) and >$110M in nuclear awards .
  • Management initiated FY 2025 guidance: total sales growth +5–7% (organic +3–5%), adjusted EPS $3.10–$3.30, net interest expense ~$70M, adjusted tax rate ~21%, and capex $80–90M; midpoint EPS implies +22% YoY on adjusted basis .
  • Mix and phasing impacted Q4: OE revenues down 2% while aftermarket grew 4%; FX translation (-100 bps to sales) and higher interest from the MOGAS deal reduced EPS by ~$0.04; adjusted tax rate normalized vs last year’s discrete benefits .
  • Structural margin gains continued across Pumps (FPD) and Flow Control (FCD) as the Flowserve Business System and 80/20 portfolio actions expanded adjusted gross margin to 32.8% and adjusted operating margin to 12.6% .
  • The Street consensus data from S&P Global for Q4 was unavailable due to request limits, so beat/miss vs estimates cannot be determined at this time (consensus unavailable).

What Went Well and What Went Wrong

What Went Well

  • Aftermarket momentum: Q4 aftermarket bookings of $618M marked the third straight quarter above $600M; management emphasized “speed wins” in service and rising capture rates .
  • Nuclear and power market strength: >$110M nuclear awards in Q4; power bookings up >40% YoY, with selective bidding improving mix and margins .
  • Margin expansion: Adjusted gross margin reached 32.8% and adjusted operating margin 12.6%, reflecting operational excellence and 80/20 portfolio simplification .
    • “We made significant progress throughout 2024…expand margins, increase adjusted earnings, and deliver strong cash flow.” — CEO Scott Rowe .

What Went Wrong

  • FX and interest headwinds: FX reduced reported sales growth by ~100 bps and adjusted EPS by ~$0.02; acquisition financing of MOGAS added ~$0.02 EPS headwind in Q4 .
  • OE softness and project phasing: OE revenues down 2% as last year’s large percentage-of-completion revenue (e.g., Jafurah Phase I) did not repeat; FCD margins saw slight drag from MOGAS shipment timing .
  • Tax normalization: Adjusted tax rate of ~21% vs 8% in Q4 2023 (which benefited from discrete items) reduced EPS by ~$0.13 YoY .

Financial Results

Quarterly Headline Results (oldest → newest)

MetricQ2 2024Q3 2024Q4 2024
Sales (Revenue) ($USD Billions)$1.157B $1.133B $1.180B
Reported Diluted EPS ($)$0.55 $0.44 $0.59
Adjusted EPS ($)$0.73 $0.62 $0.70
Adjusted Gross Margin (%)32.3% 32.4% 32.8%
Adjusted Operating Margin (%)12.5% 11.1% 12.6%

Q4 YoY Comparison vs Q4 2023

MetricQ4 2023Q4 2024
Sales (Revenue) ($USD Billions)$1.165B $1.180B
Reported Diluted EPS ($)$0.47 $0.59
Adjusted EPS ($)$0.68 $0.70
Adjusted Operating Margin (%)10.5% 12.6%

Segment Results (FPD & FCD)

Segment MetricQ2 2024Q3 2024Q4 2024
FPD Sales ($USD Billions)$0.812B $0.782B $0.795B
FPD Operating Margin (Reported %)16.1% 14.0% 16.2%
FPD Operating Margin (Adjusted %)16.9% 16.4% 17.5%
FCD Sales ($USD Billions)$0.348B $0.353B $0.388B
FCD Operating Margin (Reported %)9.3% 13.2% 11.5%
FCD Operating Margin (Adjusted %)13.4% 14.7% 15.3%

KPIs and Order Metrics

KPIQ2 2024Q3 2024Q4 2024
Total Bookings ($USD Billions)$1.25B $1.20B $1.175B
Aftermarket Bookings ($USD Billions)$0.614B $0.615B $0.618B
Backlog ($USD Billions)$2.7B $2.8B $2.790B

Non-GAAP Adjustments (Q4 2024)

  • Key adjustments to arrive at adjusted EPS ($0.70): realignment ($0.08), acquisition-related ($0.04), purchase accounting/intangibles ($0.02), below-the-line FX (-$0.02) .

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Organic Sales GrowthFY 2025N/A+3% to +5% Initiated
Total Sales Growth (incl. M&A/FX)FY 2025N/A+5% to +7% (MOGAS +300 bps; FX ~-100 bps) Initiated
Adjusted EPSFY 2025N/A$3.10–$3.30 Initiated
Net Interest ExpenseFY 2025N/A~$70M Initiated
Adjusted Tax RateFY 2025N/A~21% Initiated
Capital ExpendituresFY 2025N/A$80–$90M Initiated
Quarterly DividendQ2 2025 payment$0.21/share (Dec 2024 announcement) $0.21/share, payable Apr 11, 2025 Maintained
Adjusted EPSFY 2024$2.50–$2.70 (prior) $2.60–$2.75 (raised Jul 29, 2024) ; reaffirmed Oct 28, 2024 Raised (Q2), Maintained (Q3)

Earnings Call Themes & Trends

TopicPrevious Mentions (Q2 & Q3 2024)Current Period (Q4 2024)Trend
Aftermarket capture and service velocityRecord aftermarket bookings >$610M; strong MRO demand Third straight quarter >$600M; “speed wins” mantra; capture rates rising Improving
Power/nuclear demandPower bookings up ~30%; nuclear awards >$100M in Q3 Nuclear awards >$110M; power bookings up >40% YoY Accelerating
80/20 portfolio simplificationRaised FY24 adj. EPS; margin programs underway SKU reduction 10–15% in units underway; negligible FY25 revenue headwind; +50 bps GM uplift in 2025; +200 bps margin by 2027 Improving
Digitization (RedRaven)Operational excellence highlighted; bookings momentum RedRaven monitoring assets +14% YoY; predictive capabilities to drive recurring revenue and aftermarket capture Improving
FX/Tariffs/macroFX a recurring factor; backlog near record FX -100 bps to sales; well-prepared tariff playbook; ability to reposition supply chain/price Mixed headwind, managed
LNG technology & new energyStrategic LNG tech purchase disclosed LNG pump commercialization targeted 2H; aftermarket revenue already occurring Building

Management Commentary

  • “We made significant progress throughout 2024…expand margins, increase adjusted earnings, and deliver strong cash flow.” — Scott Rowe, CEO .
  • “Adjusted operating margin of 12.6%…Q4 adjusted EPS was negatively impacted $0.02 by foreign currency translation…acquisition-related financing costs negatively impacted earnings by about $0.02.” — Amy Schwetz, CFO .
  • “A $550M number would be the floor on aftermarket bookings…mantra is speed wins…capture rates are continuing to move up.” — Scott Rowe .
  • “Our 3D strategy is well positioned…diversification bookings grew 9% and decarbonization bookings grew 36%…we increased RedRaven monitoring assets by 14%.” — Scott Rowe .

Q&A Highlights

  • Aftermarket strategy: Teams focused on quote/repair cycle-time reduction driving higher capture rates; aftermarket bookings expected to remain robust .
  • 80/20 impact: SKU reductions of 10–15% in units underway; revenue headwind negligible in 2025, while margin uplift accelerates into 2026; +50 bps GM expected in 2025 from portfolio actions .
  • Book-to-bill outlook: Management expects >1.0 in 2025, citing strong project funnel, power/nuclear demand, and stable general industry aftermarket .
  • Tariff preparedness: Detailed scenario planning; supply chain repositioning and pricing actions in place; U.S. exposure more on inputs (castings/forgings) than finished goods .
  • LNG technology: Commercialization of cryogenic pump targeted for 2H; aftermarket services already contributing revenue .
  • Channel inventory: U.S. stocking distributors lean; modest rebuild expected as sector backdrop remains favorable .

Estimates Context

  • S&P Global consensus estimates for Q4 2024 (EPS, revenue) were unavailable due to request limits on retrieval at this time; as a result, beat/miss vs consensus cannot be determined (consensus unavailable).
  • Actual results reported: Q4 sales $1.180B and adjusted EPS $0.70 .
  • Where estimates may adjust: 2025 adjusted EPS guidance $3.10–$3.30 and commentary on FX headwinds and MOGAS synergy timing may prompt upward revisions to out-year margins and EPS trajectories .

Key Takeaways for Investors

  • Structural margin story intact: Adjusted operating margin advanced to 12.6% with clear levers (operational excellence and 80/20) to reach 2027 targets; FPD adjusted margin at 17.5% demonstrates sustained progress .
  • Aftermarket durability: Three straight quarters >$600M bookings and management signaling a ~$550M floor underpin resilient cash flow and margin mix .
  • Power/nuclear cycle strength: >$110M nuclear awards and >40% YoY power bookings suggest multi-year demand tailwinds; selective bidding bolsters margins .
  • FY 2025 setup: Midpoint adjusted EPS +22% YoY with MOGAS contributing ~$0.16 and portfolio actions compounding through the year; expect more seasonally normal cadence (Q1 lowest, Q4 highest) .
  • Watch headwinds: FX (-100 bps sales), higher interest expense from MOGAS financing, and normalized tax rate are earnings drags but manageable within guidance .
  • Tactical angle: Near-term trading may key off aftermarket capture commentary, nuclear/power award flow, and confirmation of margin trajectory; channel inventory rebuild could support FCD volumes .
  • Medium-term thesis: Execution under the Flowserve Business System plus 80/20 portfolio reduction supports sustained gross margin and operating margin expansion, compounding EPS and FCF generation .

Additional Relevant Q4 Press Releases

  • Flowserve announced quarterly cash dividend of $0.21 per share and scheduled Q4 release/call .
  • MOGAS acquisition completed on Oct 15, 2024, enhancing severe service valves exposure in mining/minerals and process industries (purchase price ~$305M) .