Flowserve (FLS) Q2 2024 earnings summary

Executive summary

• Q2 2024 saw revenue rise 7.1% year-over-year to $1.16 billion, with adjusted EPS up 40% to $0.73 and reported EPS at $0.55, driven by strong operational execution and robust aftermarket activity.

• Bookings reached $1.25 billion, up 12% year-over-year, with record aftermarket bookings exceeding $610 million and backlog growing to $2.7 billion.

• Operational and product excellence programs, including the 3D growth strategy (Diversify, Decarbonize, Digitize), are driving margin improvements and supporting long-term growth.

• Technology acquisitions and strategic divestitures, such as the NAF AB control valves business, are optimizing the portfolio and expanding clean energy offerings.

• Aftermarket bookings hit a record $614 million, with strong performance in oil & gas, chemicals, and power markets.

Financial highlights

• Q2 2024 revenue was $1.16 billion (+7.1% YoY), with adjusted gross margin at 32.3% (up 200 bps YoY) and adjusted operating margin at 12.5% (up 210 bps YoY).

• Adjusted operating income rose to $144 million, up nearly $32 million YoY, with incremental margin exceeding 41%.

• Net earnings attributable to Flowserve were $72.6 million in Q2 2024, up 41.9% year-over-year.

• Reported EPS was $0.55, including $0.18 of net adjusted items, mainly from a $13 million non-cash divestiture charge.

• Free cash flow conversion is expected to be 80% or more for the full year.

Outlook and guidance

• Full-year 2024 adjusted EPS guidance raised to $2.60–$2.75, a 27% increase at the midpoint versus 2023.

• 2024 revenue guidance updated to $4.5 billion, a 5% increase over 2023.

• Book-to-bill ratio expected to remain above 1.0 for the year, supporting continued backlog and revenue growth.

• Margin expansion is the primary focus for 2024, with further improvement expected in 2025 as product excellence initiatives scale.

• Adjusted EPS guidance excludes ~$45 million in realignment charges and potential FX/discrete items.