Flowserve's Q1 2025: Navigating Tariff Challenges and Aftermarket Growth Amid Contradictions
Earnings DecryptFriday, May 9, 2025 3:40 am ET
2min read
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Strong First Quarter Financial Performance:
- Flowserve reported revenue of $1.1 billion for the first quarter of 2025, with a 5% increase compared to the previous year.
- The company delivered adjusted operating margin of 12.8% and adjusted earnings per share of $0.72, representing a nearly 25% increase over the prior year.
- This growth was driven by strong bookings, healthy revenue conversion, and favorable product mix.
Tariff Challenges and Mitigation Strategies:
- Flowserve estimates the annualized gross impact of new tariffs before mitigation actions to be between $90 million and $100 million.
- The company is mitigating this impact through pricing actions, supply chain shifts, and leveraging regional manufacturing capacities.
- Flowserve's global footprint and strategic supply chain management position it well to navigate tariff challenges.
Increased Aftermarket and Nuclear Activity:
- Aftermarket bookings reached almost $690 million, setting a new record and representing the fourth consecutive quarter above $600 million.
- Nuclear bookings exceeded $100 million for the third consecutive quarter, with significant contributions from a large nuclear power plant upgrade and original equipment orders in Europe.
- Focus on growing the aftermarket business and favorable project funnel dynamics contributed to these results.
Capital Allocation and Shareholder Returns:
- Flowserve repurchased $53 million of shares year-to-date, reflecting a strategic view that the company's share price is discounted relative to its intrinsic value.
- The company maintained its commitment to maintaining an investment-grade rating and exploring M&A opportunities to enhance shareholder value.
- This capital allocation strategy aligns with Flowserve's long-term strategic objectives.
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Strong First Quarter Financial Performance:
- Flowserve reported revenue of $1.1 billion for the first quarter of 2025, with a 5% increase compared to the previous year.
- The company delivered adjusted operating margin of 12.8% and adjusted earnings per share of $0.72, representing a nearly 25% increase over the prior year.
- This growth was driven by strong bookings, healthy revenue conversion, and favorable product mix.
Tariff Challenges and Mitigation Strategies:
- Flowserve estimates the annualized gross impact of new tariffs before mitigation actions to be between $90 million and $100 million.
- The company is mitigating this impact through pricing actions, supply chain shifts, and leveraging regional manufacturing capacities.
- Flowserve's global footprint and strategic supply chain management position it well to navigate tariff challenges.
Increased Aftermarket and Nuclear Activity:
- Aftermarket bookings reached almost $690 million, setting a new record and representing the fourth consecutive quarter above $600 million.
- Nuclear bookings exceeded $100 million for the third consecutive quarter, with significant contributions from a large nuclear power plant upgrade and original equipment orders in Europe.
- Focus on growing the aftermarket business and favorable project funnel dynamics contributed to these results.
Capital Allocation and Shareholder Returns:
- Flowserve repurchased $53 million of shares year-to-date, reflecting a strategic view that the company's share price is discounted relative to its intrinsic value.
- The company maintained its commitment to maintaining an investment-grade rating and exploring M&A opportunities to enhance shareholder value.
- This capital allocation strategy aligns with Flowserve's long-term strategic objectives.
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