Flowserve (FLS) Gabelli Funds 35th Annual Pump, Valve & Water Symposium summary

Business performance and outlook

• Anticipates organic sales growth of 2%-5% and total sales growth of 5%-7% for 2025, supported by a strong $2.8 billion backlog, with 83% expected to convert to revenue in 2025.

• Aftermarket bookings have exceeded $600 million for three consecutive quarters, providing a stable revenue base.

• Power segment, especially nuclear, is experiencing robust growth, with over $100 million in nuclear bookings for two consecutive quarters.

• Oil and gas projects in the Middle East are shifting from mega-projects to mid-sized projects, which offer higher margins.

• Business is less sensitive to oil prices and more tied to asset utilization and recurring aftermarket revenue.

Strategic initiatives and M&A

• Recent acquisitions, such as MOGAS and NexGen, expand exposure to mining and cryogenic pump technology, enhancing product and market diversification.

• M&A strategy focuses on diversification, decarbonization, and digitization, with a preference for financially responsible deals that are accretive to margins and EPS.

• MOGAS acquisition is expected to add $175 million in revenue and strengthen aftermarket capabilities.

• 3D strategy (diversification, decarbonization, digitization) guides both inorganic growth and new product development.

Operational excellence and margin expansion

• 80/20 portfolio review process is being rolled out across business units, targeting 50 basis points of margin expansion in 2025 and greater expansion in 2026.

• FPD division has reached targeted gross margin range of 16%-18%, with further upside anticipated.

• Operational excellence and supply chain redundancy efforts have improved resilience to tariffs and global uncertainties.

• Two-thirds of business is outside the U.S., providing geographic diversification and flexibility.