Flowserve Corporation (NYSE:FLS) Q3 2023 Results Conference Call October 26, 2023 11:00 AM ET

Company Participants

Jay Roueche - Vice President, Investor Relations and Treasurer

Scott Rowe - President and Chief Executive Officer

Amy Schwetz - Senior Vice President and Chief Financial Officer

Conference Call Participants

Andy Kaplowitz - Citigroup

Mike Halloran - Baird

Damian Karas - UBS

Saree Boroditsky - Jefferies

Kenny Sim - RBC Capital Markets

Joe Ritchie - Goldman Sachs

Peter Costa - Mizuho

Nathan Jones - Stifel

Operator

Good day. And welcome to the Third Quarter 2023 Flowserve Corporation Earnings Conference Call. Today's conference is being recorded.

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

Jay Roueche

Thank you, Melinda. Good morning, everyone. We appreciate you joining our conference call to discuss Flowserve's third quarter 2023 financial results. On the call with me today 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 your 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. These statements are based upon forecasts, expectations and other information available to management as of October 26, 2023, and they involve risks and uncertainties, many of which are beyond the company's control. We encourage you to 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 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. It was great to see so many of you in person at our Analyst Day a few weeks ago in New York City, where we outlined our 2027 financial targets and our strategies to achieve them. We discussed our new operating model and how it has enabled the company to improve our speed, accountability and cost efficiency in our operations. We also highlighted our belief that the intersection of energy security and energy transition has Flowserve well positioned for accelerated growth driven by the success of our 3D strategy, which we'll provide further updates and progress on today. For anyone who hasn't reviewed the Analyst Day materials, I'd encourage you to access them on our Web site in the Investor Relations section. Let's now turn to the quarter. I'm extremely pleased with the continued strong operating performance that we demonstrated again this quarter. This performance drove admirable financial results, including the adjusted earnings per share of $0.50, which exceeded our internal expectations. Our execution continued to improve during the quarter, evidenced by our highest quarterly revenue since 2015 with an adjusted gross margin of nearly 30% despite the higher mix of original equipment revenue. Our markets remain healthy and supportive and we delivered over $1 billion in bookings for the seventh consecutive quarter. With a book-to-bill of nearly 1 times, we largely maintained our near-record backlog of $2.8 billion. This backlog provides a strong foundation to our 2024 revenue and earnings growth expectations.