Flowserve Corporation — Third Quarter 2026 Earnings Summary

Financial Performance:

• Reported sales for Q3 2026 were $1,237.8 million, a 5.4% increase year-over-year from $1,174.4 million; year-to-date (YTD) sales were $3,475.2 million, a 0.9% decrease from $3,507.1 million.
• Organic sales for Q3 2026 declined 1.2% year-over-year, compared to a 4.9% decline in the prior year period.
• Reported EPS for Q3 2026 was $0.81, down from $1.67 in Q3 2025; YTD reported EPS was $2.21, down from $2.85.
• Adjusted EPS for Q3 2026 was $1.07, an 18.9% increase from $0.90 in Q3 2025; YTD adjusted EPS was $2.87, up 13.4% from $2.53.
• Operating margin for Q3 2026 was 12.5%, expanding 580 basis points from 6.7% in the prior year; YTD operating margin was 12.2%, up 200 basis points from 10.2%.
• Adjusted operating margin for Q3 2026 was 16.5%, expanding 170 basis points from 14.8% in the prior year; YTD adjusted operating margin was 15.6%, up 150 basis points from 14.1%.
• Cash from operations for Q3 2026 was $144.1 million, a decrease of $257.7 million from $401.8 million in Q3 2025; YTD cash from operations was $230.3 million, down $275.8 million from $506.1 million.
• Backlog stood at $3.5 billion (specifically $3,471.8 million), up 19.9% year-over-year from $2,896.1 million, representing the largest backlog in the company's history.
• Total bookings for Q3 2026 were $1,383.5 million, up 14.1% year-over-year from $1,213.0 million; YTD bookings were $3,872.5 million, up 10.3% from $3,511.2 million.
• Aftermarket bookings for Q3 2026 reached a record $727.7 million, up 11.4% year-over-year from $653.1 million.
• Gross profit margin for Q3 2026 was 33.5% (reported) and 36.7% (adjusted); YTD gross profit margin was 33.9% (reported) and 36.6% (adjusted).

Guidance and Future Outlook:

• Raised the low end of full-year 2026 adjusted EPS guidance to a range of $4.10 to $4.20 (previously $4.05 to $4.20).
• Revised full-year 2026 organic sales guidance to a decline of 2.5% to 1.5% (previously approximately 1% decline).
• Total sales growth guidance for 2026 is now approximately +2% to +3% (previously approximately +3%).
• Guidance assumes tariff rates in place as of October 1, 2026, and reflects increasingly challenging conditions in the Middle East due to armed conflict and geopolitical instability.
• Management expects the Middle East conditions to delay customer activity and revenue conversion, impacting fourth-quarter sales.
• Long-term goal remains delivering mid-single digit organic sales CAGR through 2030.
• Capital expenditures guidance for 2026 was revised to approximately $90 million (previously approximately $100 million).
• Net interest expense guidance remains approximately $85 million.
• Adjusted tax rate guidance remains 21% to 22%.

Business Segments and Product Lines:

• Flowserve Pumps Division:
  • Q3 2026 bookings were $940.1 million, up 14.7% year-over-year; YTD bookings were $2,646.3 million, up 10.5%.
  • Q3 2026 sales were $830.4 million, up 3.8% year-over-year; YTD sales were $2,389.0 million, down 0.6%.
  • Q3 2026 operating margin was 20.2% (up 330 bps from 16.9%); YTD operating margin was 19.9% (up 180 bps from 18.1%).
  • Q3 2026 backlog was $2,377 million, up 18.5% year-over-year.
• Flow Control Division:
  • Q3 2026 bookings were $446.2 million, up 12.6% year-over-year; YTD bookings were $1,236.0 million, up 9.8%.
  • Q3 2026 sales were $411.6 million, up 9.1% year-over-year; YTD sales were $1,096.5 million, down 1.5%.
  • Q3 2026 operating margin was 8.3% (down 400 bps from 12.3%); YTD operating margin was 7.9% (down 250 bps from 10.4%).
  • Q3 2026 backlog was $1,105 million, up 23.2% year-over-year.
• The division recorded a $16.2 million gain on the sale of the PMV Automation business within the Flow Control Division during Q3 2026.
• Strategic acquisitions included Trillium Valves, Flowserve Al Mansoori Services Company (FAMCO), and Greenray; FAMCO acquisition involved a $27.7 million gain on remeasurement of a previously held equity interest.

Market and Competitive Landscape:

• The company operates in global infrastructure markets, specifically serving the energy, chemical, power generation, and general industries.
• Management noted significant growth in backlog alongside healthy underlying demand across end markets.
• The company faces increasingly challenging conditions in the Middle East due to armed conflict and geopolitical instability.
• The company navigates global supply chain disruptions and inflationary environments.
• The company reports exposure to fluctuations in foreign currency exchange rates, including in hyperinflationary countries such as Argentina.

Risks and Challenges:

• Armed conflict and geopolitical instability in the Middle East are delaying customer activity and revenue conversion.
• Risks include economic and political risks associated with international operations, trade embargoes, and changes to tariffs or trade agreements.
• Potential for unexpected cancellations or delays of customer orders in the reported backlog.
• Dependence on customers' ability to make required capital investment and maintenance expenditures.
• Volatile raw materials prices could adversely impact operating margins.
• Risks associated with the successful execution of restructuring and realignment initiatives.
• Potential adverse effects from litigation and environmental compliance costs.
• Cyber-based attacks or network security breaches could disrupt business operations.

Management Commentary and Tone:

• Scott Rowe, President and CEO, stated that teams delivered meaningful bookings growth, adjusted operating margin expansion, and higher adjusted EPS while navigating ongoing Middle East disruption.
• Management highlighted the "Flowserve Business System" as a driver translating market demand into bookings growth and stronger profitability.
• Confidence was expressed in delivering mid-single digit organic sales CAGR through 2030, supported by significant backlog growth and operational progress.
• Management remains focused on converting growing backlog to sales, reducing operational complexity, and continuing margin expansion to create shareholder value.
• The tone indicates resilience and commitment to execution despite challenging external conditions.

Other Key Points:

• The company participated in the Baird Global Industrial Conference on November 11, 2026, and the Goldman Sachs Industrials and Materials Conference on December 2, 2026.
• During the nine months ended September 30, 2026, the company repurchased common shares for $75.0 million and paid dividends of $82.9 million.
• The company issued senior notes for $499.3 million and drew down $74.8 million on long-term debt during the nine-month period.
• Capital expenditures for the nine months ended September 30, 2026, were $51.1 million.
• Goodwill increased from $1,392.0 million at December 31, 2025, to $1,698.0 million at September 30, 2026.
• Other intangible assets increased from $198.5 million to $369.7 million over the same period.
• Cash and cash equivalents decreased from $760.2 million to $742.1 million between December 31, 2025, and September 30, 2026.
• The company recorded a $3.1 million loss on Blue Chip Swap Securities during the nine months ended September 30, 2026.