Flowserve Corporation

Reported sales were $1.2 billion, down 2% year over year, with organic sales down 3%. Adjusted gross margin was 35.9%, up 100 basis points, and adjusted operating margin was 15.3%, up 70 basis points. Adjusted EPS was $0.95, up 4% versus Q2 2025. Bookings were $1.35 billion, up 26%, with book-to-bill of 1.15x; aftermarket bookings were nearly $700 million, up 12%, and original equipment bookings were roughly $650 million, up 44%. For the full year, management now expects organic sales to be down approximately 1%, total sales growth of approximately 3% including about 300 bps from acquisitions/divestitures and 100 bps from FX, adjusted EPS of $4.05 to $4.20, and full-year adjusted operating margin expansion of about 100 basis points. Third-quarter guidance calls for roughly flat organic sales growth, mid-single-digit total sales growth, modest operating margin expansion from Q2, and net earnings similar to Q2.

Scott Rowe framed the quarter as evidence that Flowserve is building earnings power through the Business System, 80/20, and commercial excellence. He emphasized broad-based bookings strength, especially record aftermarket bookings, healthy project funnel momentum, and confidence in the company’s long-term 2030 targets. His tone was upbeat and confident, while acknowledging Middle East disruption as a temporary headwind and highlighting longer-term upside from energy security, nuclear, LNG, and regional rebuild/redundancy spending.

Amy Schwetz focused on the quality of the quarter’s financial execution: sales of $1.2 billion, gross margin of 35.9%, operating margin of 15.3%, and EPS of $0.95. She said operating cash flow was $129 million, free cash flow conversion was 92% of adjusted net earnings, and full-year free cash flow conversion is still expected at about 90%. She also noted net leverage of 1.8x after issuing $500 million of 5.7% senior notes due 2036 to fund Trillium, and she described Trillium as expected to be roughly neutral to EPS in 2026 while adding operating profit dollars.

Analysts pressed management on the sustainability of bookings momentum, the size and timing of Middle East-driven opportunities, and whether FCD margins could catch up to FPD. Management said mid-single-digit full-year bookings growth remains the target, with Q2 strength driven by record aftermarket and several large awards including LNG and nuclear. On the Middle East, Rowe estimated roughly $50 million of rebuild opportunity in late 2026 and 2027, but said the larger redundancy opportunity is too early to size. On margins, Schwetz said FCD would have shown over 100 bps of improvement absent Middle East, and expects second-half margin expansion as 80/20 headwinds and other first-half drags abate.