Flowserve Corporation (NYSE:FLS) Q3 2022 Earnings Conference Call November 1, 2022 11:00 AM ET

Company Participants

Jay Roueche - VP, IR and Treasurer

Scott Rowe - President and CEO

Amy Schwetz - SVP and CFO

Conference Call Participants

Deane Dray - RBC Capital Markets

Michael Halloran - Robert W. Baird

Andy Kaplowitz - Citigroup

Saree Boroditsky - Jefferies

Nathan Jones - Stifel

Joe Giordano - Cowen

Operator

Good day and welcome to the Q3 2022 Flowserve Corporation Earnings Conference Call. Today's conference is being recorded.

At this time, I would like to turn the conference over to Jay Roueche, Vice President, Investor Relations and Treasury. Please go ahead.

Jay Roueche

Thank you, Elena, and good morning, everyone. We appreciate you participating in our conference call today to discuss Flowserve's third quarter 2022 financial results. On the call with me this morning are Scott Rowe, Flowserve's President and Chief Executive Officer; and Amy Schwetz, Senior Vice President and Chief Financial Officer. Following our prepared comments, we will open the call for questions. As a reminder, this event is being webcast and an audio replay will be available.

Please note that our earnings materials do and this call will include non-GAAP measures and contain forward-looking statements. And these statements are based upon forecasts, expectations and other information available to management as of November 1, 2022, and they involve risks and uncertainties, many of which are beyond the company's control. We encourage you to fully review our safe harbor disclosures as well as the reconciliation of our non-GAAP measures to our reported results, both of which are included in our press release and earnings presentation and are accessible on our website at flowserve.com in the Investor Relations section.

I would now like to turn the call over to Scott Rowe, Flowserve's President and Chief Executive Officer, for his prepared comments.

Scott Rowe

Thanks, Jay, and good morning, everyone. Thank you for joining our third quarter earnings call. Let me start by saying that no one is more disappointed than I am about the performance in the third quarter. Our results this period do not reflect what Flowserve is capable of delivering nor are they representation of what we expect going forward. The third quarter was impacted by a number of items, some of which are self-inflicted, some were strategic decisions, and other were onetime events that came to fruition in the quarter.

As a result, we delivered third quarter adjusted EPS of only $0.09. In addition to the $0.19 of ERP systems issues and corporate expense items that was disclosed in our September update, we also incurred other unexpected costs and headwinds in late September that further deteriorated our margins and earnings, such as higher-than-expected bad debt and under-absorption expenses as well as project true-up costs coming from inflation-related impacts in our highly engineered businesses.