Flowserve CEO Details Path to 20% Operating Margins at Citi Conference, Eyes $10B Nuclear Prize
February 17, 2026 · by Fintool Agent
Flowserve CEO Scott Rowe took the stage at Citi's 2026 Global Industrial Tech and Mobility Conference in Miami on Monday, his first appearance at the annual industrial gathering after nine years of scheduling conflicts with earnings calls. The message he delivered was worth the wait: the flow control specialist has achieved its 2027 margin targets two years early and is now gunning for 20% operating margins by 2030, underpinned by a $10 billion nuclear opportunity and disciplined execution of what management calls the "Flowserve Business System."
The stock is trading near its 52-week high at $89.25, up 139% from its 52-week low of $37.34, as investors digest the company's transformation story and its strategic positioning in the nuclear renaissance.
500 Basis Points in Three Years
The headline numbers tell the story of operational turnaround. Flowserve delivered 500 basis points of margin improvement over the last three years, with adjusted operating margin reaching 16.8% in Q4 2025—well above the company's original 2027 target framework.
"In 2023, we did a couple things that were incredibly formative," Rowe explained to Citi analyst Andrew Kaplowitz. "One was an organization design, which oriented us to business units that were global around product family. That was the catalyst that allowed us to do some really cool things."
| Metric | FY 2022 | FY 2023 | FY 2024 | FY 2025 |
|---|---|---|---|---|
| Revenue ($B) | $3.62 | $4.32 | $4.56 | $4.73 |
| EBITDA Margin | 8.7% | 11.2% | 13.1% | 16.1% |
| Adj. Operating Margin | 10%* | 12%* | 11.8%* | 14.8%* |
| Diluted EPS | $1.44 | $1.42 | $2.14 | $2.64 |
*Values retrieved from S&P Global
Ask Fintool AI AgentThe Flowserve Business System: Three Pillars
Rowe broke down the operational transformation into three distinct pillars that he says are now embedded across every facility worldwide.
Operational Excellence has been the longest journey, starting with elements of "Flowserve 2.0" back in 2018. "We're driving substantial productivity at all of our sites," Rowe said. "We're avoiding what I would call disruptive-type events, where you're leaking margin or you're hurting our customers."
One striking datapoint: Flowserve has reduced its supplier count by 50% since Rowe became CEO. "If you're working with our best suppliers, if we're giving them a healthy amount of business, it's a lot easier to have these type of discussions with them in terms of balancing our load or shifting our load," he explained.
Portfolio Excellence (80/20) launched company-wide in 2024-2025. "You could go in any facility in Flowserve around the world, and they're talking about the Quadrant Segments, our A Products, our Target Selling Accounts," Rowe noted.
The industrial pumps division, the first unit to adopt the methodology, is now growing over 20% with target accounts—validating the thesis that pruning low-margin business frees resources to accelerate in high-value segments.
Commercial Excellence is the newest initiative, with sales force retraining launched mid-2025 and approximately 40% complete. "It really is a lot of the basics, but I think the basics in our business is really what can drive outsized growth," Rowe said.
Project Pricing Transformation
One of the most significant shifts has been in project margins—historically a drag on profitability. Rowe was blunt about the old reality: "We were talking about gross margins, Andy, I think, in maybe a 10% number, and sometimes they were even lower before my time."
That's over. "I don't... there's occasionally we would approve something that would be below a 20%, but that's really rare," Rowe said. The company now evaluates original equipment opportunities on a 5-7 year lifecycle basis, factoring in aftermarket capture rates. "We call this Selective Bidding. We've reduced the number of opportunities in the funnel."
Ask Fintool AI AgentThe Nuclear Opportunity: $10 Billion Prize
Nuclear power represents the growth catalyst that has investors most excited. Flowserve has equipment installed on 75% of all reactors globally and booked approximately $400 million in nuclear awards in 2025.
Rowe outlined a three-pronged nuclear strategy:
Life Extensions & Re-rates: The majority of 2025's $400 million came from extending and upgrading existing nuclear assets. "That work will continue to accelerate," Rowe said, noting faster revenue conversion cycles compared to greenfield projects.
Greenfield Reactors: Each new large-scale reactor represents approximately $100 million of Flowserve content. The company is locked in with major players including Westinghouse, GE Hitachi, EDF, and Candu. "If a reactor moves forward, Flowserve will be involved there," Rowe stated.
Small Modular Reactors (SMR): While not expected to contribute meaningfully in 2026, Rowe is bullish on the long-term: "I believe beyond 2026, it's an absolutely unlock for some of the challenges in power around the world."
Trillium Adds 15-20% More Content Per Reactor
The $490 million Trillium Flow Technologies Valves Division acquisition, announced alongside Q4 earnings, is specifically designed to expand Flowserve's nuclear footprint.
"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%-20%," Rowe explained. That brings total content per new reactor to $115-120 million.
Trillium brings the Main Steam Isolation Valve—"essentially the critical safety valve"—plus installations across 115 operating nuclear reactors worldwide.
2026 Outlook: First Half Flat, Second Half Acceleration
Management guided 2026 total revenue growth of 5-7% with adjusted EPS of $4.00-$4.20, representing 13% growth at the midpoint versus 2025's adjusted EPS of $3.64.
However, the cadence will be uneven. CFO Amy Schwetz flagged approximately 100 basis points of revenue headwind from 80/20 exits in H1 2026, following a similar impact in H2 2025. "The first quarter will roughly be flat to maybe slightly down," Rowe acknowledged.
The back half should accelerate on:
- Lapping 80/20 headwinds
- Middle East project timing (Rowe was in the region in late January)
- Continued aftermarket growth at mid-to-high single digits
- Nuclear backlog burn
| Metric | FY 2025A | FY 2026E | FY 2027E |
|---|---|---|---|
| Revenue ($B) | $4.73 | $5.01* | $5.31* |
| EPS (Consensus) | $3.64 | $4.12* | $4.66* |
| EBITDA ($M) | $760 | $885* | $969* |
*Values retrieved from S&P Global
Stock Near 52-Week Highs
Flowserve shares have been on a tear, up nearly 140% from the 52-week low of $37.34 to Monday's $89.25, just shy of the $90.83 high. The stock gained 2.6% on Q4 earnings day (February 13).
Citi's Kaplowitz, who hosted the fireside chat, raised his price target from $85 to $98 following the earnings report—a vote of confidence in the margin expansion story and nuclear positioning.
Ask Fintool AI AgentRedRaven: The Sleeper Opportunity
One underappreciated element is RedRaven, Flowserve's IoT monitoring platform for pumps and valves. The business is now profitable for the first time.
More importantly, Flowserve has signed a partnership with Honeywell to integrate RedRaven into Honeywell Forge, the conglomerate's asset performance management platform. This could unlock enterprise-wide deployments rather than one-off installations.
"If Honeywell Forge comes in to a large site—pick chemical plant, refinery—they're gonna manage that entire site. We'll pick up all flow control equipment, and so all pumps, whether they're Flowserve pumps or competitive pumps," Rowe explained.
What to Watch
- Trillium Close: Expected mid-2026; watch for integration execution
- Middle East Bookings: Large project awards skewed to H2 2026
- SMR Progress: Potential catalyst if U.S. or Europe accelerates new reactor approvals
- 80/20 Headwind Lap: Revenue comparisons should ease in H2 2026
- RedRaven/Honeywell: Potential step-change in digital revenue if partnership scales
Rowe closed with a nod to AI adoption for internal operations—"really focusing AI to solve business process challenges"—though he ran out of time before diving into specifics.
For a company that couldn't attend the Citi conference for nine years due to earnings conflicts, Flowserve picked a good time to finally show up.
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