Good day and welcome to the FlowServe 4th Quarter 2025 Earnings Call. Today's call is being recorded. At this time, I'd like to turn the call over to Brian Ezell, VP of Investor Relations. Please go ahead.

Thank you and good morning, everyone. Welcome to FlowServe's 4th Quarter and Full Year 2025 Business Update. I'm joined by Scott Rowe, FlowServe's President and Chief Executive Officer, and FlowServe Chief Financial Officer, Amy Schwetz. Following Scott and Amy's prepared remarks, we'll open the call for questions. Turning to slide two, our discussion will contain forward-looking statements that are based upon information available as of today. Actual results may differ due to risks and uncertainties. Refer to additional information including our note on non-GAAP measures and our press release, earnings presentation, and SEC filings which are available on our website. With that, I will turn it over to Scott.

Thank you, Brian, and good morning, everyone. Before I turn to the presentation, I would like to thank our associates around the world for their hard work and dedication throughout 2025. We have made tremendous progress as a company, advancing our 3D strategy to drive growth and leveraging the internal processes of a closer business system to deliver results. Our associates embraced significant change in a complex macro environment, and I could not be more pleased with what we have accomplished as an organization. These efforts culminated in outstanding financial performance in 2025 and achievement of our long-term margin targets two years ahead of plan. Let's start on slide three with bookings. Bookings for the quarter were $1.2 billion, growing roughly 3% versus the prior year period. Aftermarket bookings grew 10% to $682 million, representing the seventh consecutive quarter of bookings greater than $600 million. Project activity was steady in the quarter. we remain excited about the significant opportunities in nuclear and traditional power with notable awards in these markets, in addition to broadly positive trends in most of the other end markets. Our largest booking in the quarter was a $28 million power award, and we delivered nearly $100 million in total nuclear bookings. Larger engineered projects impacts in the energy in markets across both FPD and FCD remain muted, impacting original equipment bookings in the quarter. Our 3D diversification strategy has made FullServe more cycle resilient than ever before, with consistent and durable bookings in diverse in markets that are supported by secular mega trends, offsetting temporary pockets of softness and more cyclical in markets. We have diversified our portfolio mix and we continue to expand our aftermarket opportunities while selectively focusing on high-margin engineered projects with strong aftermarket potential. Given our progress to date and positive momentum entering 2026, we are confident our strategic areas of focus will provide the opportunity to drive growth and deliver increasing shareholder value for years to come. I will now turn it over to Amy to review fourth quarter financial results in more detail.

Thank you, Scott, and good morning, everyone. Turning to the fourth quarter in more detail on slide four, our strong results reflect the continued effectiveness and resilience of the flow-surf business system, supported by excellent execution across our global teams. Total revenues grew from 4% year-over-year to $1.2 billion, with organic sales growth growth of roughly 1% and 240 basis points of benefit from foreign currency translation. Sales performance continued to benefit from our diversified portfolio and strong aftermarket activity. Aftermarket sales increased 8% in the quarter, partially offset by a 2% decline in original equipment revenues. OE revenues were lower than we anticipated coming into the quarter, largely due to customer delays and the timing of receiving materials on percentage of completion projects. We anticipate these modest short-term impacts will abate in the first half of 2026. Turning to profitability, adjusted gross margin reached 36%, a 320 basis point improvement versus last year, and our 12th consecutive quarter of year-over-year margin expansion. We continue to advance operational excellence initiatives, 80-20 complexity reduction, and cost performance improvements, leading to a full-year incremental margin of 95%. With additional SG&A leverage, adjusted operating margin expanded 420 basis points to 16.8%, exceeding our 2027 long-term target range of 14% to 16%. These results drove adjusted EPS of $1.11, an impressive 59% increase compared to prior Moving to segment performance on slide five, FPD delivered another quarter of strong margin expansion with adjusted gross margin increasing 370 basis points to 37.1%, and adjusted operating margin, expanding 350 basis points to 21%. FPD bookings grew 8%, led by aftermarket growth of 12%. Aftermarket momentum continues, and we see substantial opportunity to capture more business from our large installed base. Original equipment bookings were up a modest 1% as large engineered project activity in the energy and market remain muted and offset growth in other areas FPD sales group 5% to 833 million dollars the segment exited the year with a Q4 book the bill of 1.06 positioning FPD well for 2026 moving to FCD as expected margin performance improved meaningfully compared to the prior year period reflected, reflecting continued execution of the closer business system and solid contributions from MOGUS. Adjusted gross margin expanded 220 basis points to 34%, and adjusted operating margin increased 440 basis points to 19.7%. MOGUS delivered accretive operating margins for the quarter, consistent with our expectations at acquisition. Turning to bookings, although growth remains a priority for FCD, margin improvement has been the segment's primary focus. For the quarter, FCD bookings declined, driven by headwinds from our continued focus on the 80-20 program and lower original equipment awards from project delays. Aftermarket bookings were roughly flat year over year. FTD's book-to-bill for the quarter was 0.84, with overall strength in the power end market, reflecting our industry-leading position. Overall, both FTD and FTD posted adjusted operating margins well above our 2027 segment target ranges of 16% to 18%, reinforcing that operational excellence and 80-20 discipline are firmly embedded across our global operations. operations. On slide six, excluding the impact of divesting our legacy asbestos liabilities, we generated $199 million of cash from operations in the fourth quarter, delivering 121% free cash flow conversion. This strong performance was driven primarily by growth in adjusted net income and continued working capital management under the FlowServe business system. During During the quarter, we returned $84 million in cash to shareholders, including $57 million in share repurchases. Looking at the full year, we delivered an outstanding $506 million in operating cash flow, a 19% increase versus 2024. Adjusting to exclude the net impact of the merger termination payment and asbestos divestiture, full year cash flow conversion was 97%. For the year, we returned $365 million to shareholders, including $255 million in share repurchases at an average price of $53 per share. We have an additional $200 million remaining on our share repurchase authorization. Our balance sheet remains healthy with net leverage of one time, providing flexibility for allocating capital towards strategic growth opportunities. I'll now turn it back to Scott to provide some context on the full year and our 2026 outlook.

Thanks, Amy. Turning now to slide seven, we delivered outstanding results in 2025, including 300 basis points of expansion in adjusted operating margins, significant adjusted EPS growth of 38%, and strong operating cash flow for the full year. The persistent strength of our aftermarket business resulted in $2.6 billion of bookings in 2025, representing 9% year-over-year growth. Our 2025 book-to-bill ratio was in line with expectations at 1.0 times, and we closed the year with a backlog of $2.9 billion. I'm incredibly proud of our progress with the full-serve business system. We are driving improved process and standardization across the enterprise. We are seeing exceptional results with operational excellence as we drive strategy deployment, perform daily operations management, optimize our materials management, and conduct real-time problem-solving on the shop floor. We see continued opportunities as we advance these principles to further improve our response to customers, deliver improved financials, and increase value for all stakeholders. Our portfolio excellence pillar is on track with all product business units having embedded 80-20 methodology and process into our product strategy and our daily operations. The cultural transformation we have undertaken is impressive, and I'm confident that we have further opportunities to reduce complexity and simplify our operations for years to come. While our commercial excellence initiative is in the early phases of implementation, we are seeing wins with the program and are gaining confidence through our early projects that the visibility and processes we are putting in place will drive sustainable growth. Since the COVID pandemic, we have spent years building a more resilient supply chain that enabled us to quickly respond to shifts in evolving market conditions and the broader macroeconomic landscape throughout 2025. In response to tariffs, we successfully shifted sourcing and implemented pricing actions that allowed us to fully mitigate the tariff impact while maintaining a high level of service to our customers. We delivered $4.7 billion in bookings for the year, including $400 million in nuclear awards. Our four largest awards during the year were all global nuclear projects, combining to a total of over $150 million, highlighting our strong market position and key customer relationships in this exciting in-market. We also entered several strategic commercial partnerships during the year, including an MOU with Honeywell to integrate our Red Raven digital offering into their Forge asset performance management system. This partnership will be instrumental in validating our innovative digital technology and its ability to enhance efficiency for our customers, allowing us to scale our offering for large industrial facilities over time. As Amy mentioned, the year was marked by disciplined capital allocation and a significant increase increasing cash return to shareholders supported by improved cash flow generation in the $266 million merger termination payment. We believe our strong execution and positive operational momentum provide the framework for continuing to deliver enhanced shareholder value in 2026 and beyond. Turning to slide eight, the full-serve business system has transformed our company in the successful integration of MOGUS onto the business system has proven that this is an effective model for integrating acquisitions. The realization of cost synergies from the MOGUS acquisition contributed to progressive margin improvement throughout the year. MOGUS is now accretive to FCD margins and we believe we are in a position to drive growth and further margin expansion by leveraging all aspects of the closer business system. Turning to slide 9, we We continue to see M&A as an important element of our disciplined capital allocation strategy and an attractive way to increase shareholder value by growing the business, diversifying our in-markets, and expanding our margins. We announced an aftermarket-focused bolt-on acquisition in December that fits our services and solutions model, and over time, we believe it is highly scalable across the global Flosurf QRC network. We also announced yesterday that FlowService signed a definitive agreement to acquire the valve and actuation business from Trillium Flow Technologies. Trillium Valves serves the nuclear, traditional power, industrial, and infrastructure sectors through an offering of market-leading, mission-critical valves and actuators. This strategic acquisition strengthens our valve and actuation portfolio and expands our global reach and attractive in markets like nuclear. Trillium has an extensive installed base of over 200,000 units, including assets in 115 operating nuclear reactors, bringing significant recurring demand for high margin aftermarket services and parts. This acquisition also increases our available content for new nuclear reactors. We shared last quarter that a large new reactor could represent $100 million of content opportunity for FlowServe, and the expanded Trillium valves offering could increase that amount by 15 to 20%. By replicating the successful playbook that we used with MOGUS, we expect to leverage all aspects of the FlowServe business system to increase Trillium's margins and grow the business over time. Turning to slide 10, I'll provide some context about the operating landscape as we move into to 2026. Our end markets have stable positive trends with the potential for outsized growth in the traditional power and nuclear segments. The general industries end market is benefiting from sustained industrial expansion, notably in mining, pharmaceuticals, and water, particularly in North America and the Middle East. Within the energy end market, elevated utilization rates and maintenance activities for large process industries have remained robust. Our large installed base and our ability to drive a higher capture rate is delivering growth in this sector even as some project work has been slow to materialize. The chemical sector continues to represent our lowest growth in-market, however, following a period of stabilization in 2025, we remain cautiously optimistic for a moderate recovery and an improved outlook in 2026. Next, our 12-month forward-looking project funnel remains healthy. All in-markets show growth both sequentially and versus the prior year. In 2026, we expect bookings to grow mid-single digits, assuming a generally consistent macroeconomic environment. Turning to slide 11, I'll highlight a few key areas of opportunity in our strategy and the FlowServe business system that support our efforts to deliver continued growth and value creation. First, our growth strategy continues to be aligned to the key global megatrends with significant investment in energy security, regionalization, and electrification. As we highlighted last quarter, we are laser focused on the growth opportunity in nuclear. FlowServe is uniquely positioned as a global leader in nuclear flow control supported by specialized product offerings companies, established customer relationships and approvals, as well as deep domain expertise, which is now further enhanced with the addition of Trillium valves. Over the next five to 10 years, nuclear energy is projected to become an increasingly integral component of our business with the potential to accelerate our bookings growth above our long-term targeted growth rates. Additionally, we expect to see continued progress with the business system as commercial excellence delivers deliberate and sustainable growth the strong progress and operational excellence and 8020 is reducing overall complexity and freeing up capacity within our manufacturing footprint allowing for the potential of further manufacturing consolidation we will continue to redeploy resources to drive growth in our best products and deliver differentiated solutions for our customers finally we believe that m&a can continue to play an important role in our long-term growth strategy, given our healthy balance sheet and proven ability to leverage the full-serve business system for integration. We will maintain a disciplined eye towards inorganic opportunities that build on full-serve's current capabilities and create long-term value for our shareholders. With this backdrop, I'll now hand it over to Amy to discuss our 2026 guidance and updated long-term financial targets.

Turning to our 2026 outlook on slide 12, we are well positioned to deliver another year of profitable growth we expect total reported sales growth of five to seven percent with organic sales growth of one percent to three percent reflecting a healthy backlog supportive end markets advancement of our 80-20 initiative and gradually increasing contributions from our commercial excellence efforts reported sales are expected to benefit a hundred basis points from favorable foreign currency translation and roughly 300 basis points of benefit from the GreenRay and Trillium Valves acquisitions. We have assumed the Trillium Valves acquisition closes mid-year and anticipate refining this estimate later in the year based on the final closing date. Turning to profitability, we expect continued growth and operating margin expansion from higher sales and further cost reductions through 80-20 portfolio refinement. Assuming a mid-year close, we anticipate Trillium will benefit adjusted operating income and be neutral to adjusted EPS given incremental financing costs. Overall, adjusted operating margin is expected to expand approximately 100 basis points for the full year. We expect adjusted earnings per share of $4 to $420, representing a midpoint increase of 13% versus 2025. Our guidance assumes an adjusted tax rate of 21 to 22 percent. We anticipate the quarterly revenue and earnings cadence to follow historical seasonality, with first quarter revenue and earnings being the lowest of the year. Original equipment bookings are expected to accelerate in the second half of the year, largely driven by increased activity in the Middle East and escalating nuclear investments, and we remain confident in continuing to expand our already healthy aftermarket capture. First-half revenues will be impacted by ongoing headwinds from 80-20 and the backlog composition. As we enter 2026, we anticipate converting roughly 76% of our existing backlog into revenue in the next 12 months, a conversion factor lower than in recent years, given an increasing mix of longer 10-year nuclear projects and reduced OE energy projects. All in, first half earnings are expected to represent roughly 40% of full-year earnings. Turning to slide 13, our consistent, disciplined approach to capital allocation continues to deliver value for shareholders. In 2025, we returned $365 million to shareholders through dividends and share repurchases, completed the acquisition of GreenRay to strengthen our aftermarket capabilities, and divested legacy asbestos liabilities, all while improving our leverage levels. Moving into 2026, we remain focused on strategically deploying capital towards growth-enhancing opportunities while staying committed to maintaining our investment-grade rating. In 2026, capital expenditure investments to drive organic growth and efficiency in our operations are expected to be $90 million to $100 million, and we anticipate at a minimum repurchasing shares to offset equity dilution. Turning to slide 14, I'm extremely proud of the progress we've made against our 2027 financial targets since establishing them in mid-2023. Though the macro environment has presented unforeseen challenges, we remain firmly on track to deliver our sales and adjusted EPS goals. We have also delivered exceptional margin expansions since launching the FlowServe business system. Over the past two years, adjusted operating margins have improved by 530 basis points, and we reached our 2027 margin target two years ahead of schedule. STD contributed meaningfully to this performance, while STD's margin improvement has accelerated recently given progress on operational excellence in our 80-20 program. Importantly, the structural enterprise-wide improvements we've made through the Floser business system, along with sustained operational rigor, give us confidence that these gains are durable, with more opportunity to enhance margins over time. Turning to slide 15, continued momentum in both growth and profitability forms the foundation of our new 2030 long-term financial targets. We are targeting a mid-single-digit organic sales CAGR from 2025 to 2030, supported by ongoing commercial excellence initiatives, our 80-20 progress, and our expected growth across end markets over the cycle. We believe disciplined M&A represents an opportunity to further enhance our sales growth profile over time. Turning to margins, the success of the FlowServe business system provides confidence in our ability to continue driving margin enhancements. Commercial excellence is in the early stages, and we anticipate our 80-20 program will continue delivering benefits through 2030. We also see ongoing benefits from operational excellence as we continue to improve our execution and accelerate roofline consolidation. Overall, we are targeting 20% adjusted operating margins by 2030, representing an average annual expansion of 100 basis points. With the expected top line growth, expanding operating margins, and additional capital allocation opportunities we are targeting a double-digit adjusted EPS taker from 2025 to 2030 I'll now turn it back to Scott for closing remarks let's turn the slide 16 to close out the prepared remarks 2025 was a tremendous year proposal I am proud of our achievements and the significant progress made by our associates culminating and delivering our 2027 margin target two years ahead of schedule.

Looking forward, we are well positioned to continue advancing and unlocking even greater potential for the company. Our updated long-term financial targets highlight our commitment to growth and further improved profitability. We are confident our strategic approach and the full-served business system have positioned the organization for continued sustainable growth and margin improvement. And with that, I'll turn the We'll call back to the operator for Q&A.

Thank you. If you would like to ask a question at this time, you may signal by pressing star one on your telephone keypad. If you're using a speakerphone, please make sure your mute function is turned off to allow your signal to reach our equipment. Once again, star one for questions. We'll take our first question from Dean Drey with RBC Capital Markets.

Thank you. Good morning, everyone.

Good morning, Dean.

Hey, May, just I thought I'd give you a shout-out for the quarter and for the year. Great job on margins and free cash flow. So great progress there. And just, May, first question, can we talk about the organic revenue growth was a bit light this quarter, and also the guide is a bit light for 26 on the organic side? And Amy mentioned some of the timing of projects, percentage of completion, just some context there, size for us, and how does that, especially percentage of completion, how does that kind of come through in the first half of 26? Sure.

So if we look at the fourth quarter revenue, probably about 50 basis points or a little bit higher than that of revenue headwinds from engineered projects projects on POC revenue that were pushed into the first half of the year. That was largely due to either customer delays or delays in getting inventory into some of our facilities that created that headwind. That will work itself out in the first half of the year. But as we look at our backlog that's in place in the first half of the year, you know, we're looking at revenue conversion in 2026 that's a little bit lower than what we've seen in prior years so about 76% of our current backlog will turn in in 2026 and it's really the tale of two cities if you think about our business today a really strong aftermarket which can convert into revenue really quickly when it comes into the backlog and then if we look at the strength of the nuclear market that takes a little bit more time to develop through the system and so that's the movement that you're seeing in in revenue conversion so in the first half of the year, we'd anticipate growth to be muted as we look at that, and so you think about that in two ways. One, both the backlog that's in place, and the second piece of that is really 80-20 efforts that accelerated in the second half of the year, wrapping around into 2026. I'd just comment overall that, you know, what we've been trying to do with this business is create a much more resilient business model and so if we think about where we're at from a margin expansion standpoint we built a model that we think margin expansion can continue to happen even in periods of time when wouldn't revenue growth is muted so we remain bullish on our opportunities to increase margins in the first half of the year but we'll expect for some of that revenue growth to accelerate in the second half I mean that's really helpful.

Thank you. And just as a follow-up, and I really didn't think I'd be asking this question, you know, last quarter, but here I am asking it now. Can you talk about the opportunity in Venezuela? I mean, I covered LOSER for a long time. Venezuela was a meaningful business for you, you know, up until like 11 years ago. So you've had a presence. You probably have good content there. And maybe just how, what is the opportunity? What's the time frame? And what we'll be watching for. Thanks.

Yeah, Dean, you've covered closer for a very long time. Venezuela was a meaningful, you know, market for us. You know, this was before I got here, kind of that 2010 to 2014 timeframe. And at one point we were doing, you know, probably at the most roughly $80 million of revenue a year. We had three QRCs that were fully operational and, quite frankly a very healthy business. The good news today is we have a large install base across pumps and valves and so if somebody were to go in and resume operations and start to invest in the country then we are well positioned to support that. We currently have one QRC operational with a handful of people and we're confident that we can kind of restart operations when appropriate. With With all of that said, we don't have that in our 2026 numbers, I'm not going to predict or forecast when somebody will commit to go into the country and get things moving. But I would say, you know, if and when it happens, we'll serve as prepared to kind of pick back up and it'll be a really nice opportunity that wasn't planned and like you said, I certainly did not expect this in the last time we spoke in the Q3 earnings call.

Really appreciate that. Thank you.

We'll take our next question from Mike Halloran with Baird.

Thanks. Good morning, everyone. Can we just talk through the simple question here, the confidence in the mid-single-digit order progression this year? I know I certainly heard the front-back half, but give me some more detail on where that's stemming from, what your customers are saying in these specific areas that you think drive it more than others.

Yeah, absolutely. I'd say, Mike, we feel really good right now about mid-single digits. Obviously the world is a dynamic place, and we just talked about Venezuela, we can talk about other countries. With that said, we've got a lot of confidence in what we're doing. The teams are working really hard to grow the business, and I'll just kind of run through some of the reasons why we believe that mid-single digits is a good number, and I also just add, we believe that's an organic number, and so I'm sure we'll talk about Trillium here very soon in one of the Q&A, but when we talked mid-single digits on the booking side, we were really thinking organic. And so maybe I'll start with our aftermarket, and you've seen the numbers here. Our aftermarket continues to grow as we get more focused on our installed base and improving our capture rates. We believe that momentum is incredibly strong, and we believe that we can continue to grow the aftermarket at least at the mid-single-digit levels. And so that's half our business. And so we've got a team that's highly focused on that, great customer relationships, and we continue to find more opportunities to expand that. And then on just the in markets, you know, the single largest growth factor for us in 2026 and beyond is the power in market. And we talked a lot about nuclear in the Q3 earnings call, but traditional power is doing incredibly well additionally. And so we feel really good about those end markets and power being at least a double-digit number for us. And then general industries is also strong. And so we're seeing an uptick in general industry kind of project and base activity. That's primarily in North America and a little bit in the Middle East and in some parts of Latin America as well. And then finally, just geographically, we didn't have a great year in the Middle East on the project side. Some of that was timing, some of it was delays in spending on the type of work that we do really well in the Middle East, but we do have visibility to Middle East spending accelerating and picking up in 2026, and that's going to be a little bit more kind of mid to back year-weighted, but we feel really good about our ability to convert orders in the Middle And then just lastly, when we looked at our project funnel, we have seen an increase both sequentially and year on year in our project funnel. Again, giving us confidence that mid-single digits is a place that we feel pretty good about.

Great. Super, super helpful. And then on Trillion, congrats on getting that portion of the company. Good asset. So twofold question here. First, with the 70% power exposure, what kind of momentum are they seeing on the order side? It's similar to what you just talked to, and then secondarily, maybe just talk to the commercial and cost synergy opportunity as well.

Sure. We're excited about Trillium. It's a good asset. For those that remember, this came out of the Weir business, and we're buying, just to be super clear, we're buying the valve portfolio of Trillium, and we believe that they've got kind of best-in-class valve assets that serve mission-critical flow control solutions, primarily in nuclear and the traditional power markets, and that makes up 70% of the business. Additionally, it's a high aftermarket contributor, and so we feel really good about our ability to leverage our QRC network to tap into their 200,000 actuators that are around the world and continue to grow that. Like us, they've seen a nice healthy kind of run rate in both the nuclear and the traditional power bookings, and so this is something that we like, the positive momentum in those in markets and building backlog as we kind of moved into the transaction. We believe that with our kind of nuclear relationships, the strong customer presence, the in-market kind of tailwind on power, we're pretty excited about the commercial opportunities here to leverage what we have and the ability to grow this business with some of the nuclear outlook. And I would say that's obviously the new nuclear reactors, some of the life extensions in nuclear, and then potentially when things move forward in SMR, this business is positioned well to take share in that upcoming and emerging market. And so all in all, we feel good. Just on the synergy side, we didn't publish a number on the cost synergy. I would say that there are cost synergies in this business. It would be exactly what you would expect. We'll use our operational excellence program and the full-cert business system to do exactly what we did with MOGUS to get the manufacturing improvements, the supply chain savings. We will run 80-20 very quickly in the portfolio. In fact, we had a conversation last week about starting to pull that data in the right way that allows us to launch 80-20 right out of the gates. And there will be some roofline consolidation as we move forward as well. The one thing I will highlight that this is a carve-out, so it's owned by private equity today. day, we're carving out the valve business, and so the overhead and some of that corporate synergies won't come through like you would normally see. But overall, I'd say a high level of confidence that we can continue to grow this business and that we can move the margins forward running the full-serve business system playbook.

Really appreciate it, Scott.

Thank you. We'll take our next question from Amit Merota with UBS.

Thanks. Good morning, everybody. appreciate you letting me ask a question. I wanted to talk about the 2030 outlook and, you know, obviously the implied acceleration in growth after 25 and what you're guiding for 26. I assume it's because of what you're seeing in the power bookings. I think there were up mid-teens in the quarter. And obviously now that's becoming a bigger part of the business with Trillium, maybe high-teens or something like that, a nuclear in particular. Maybe just talk about that and and what you think those things actually mean for kind of the structural change and through-cycle growth once we get towards the end of this year into 2017.

Sure, yeah, I'll just tie it to like some of the mega themes that we're seeing. You know, obviously electricity is a big one, and that's something that's important around the world to drive, you know, security and then further regionalization, and then there's a digital component. And so all of those things have played into kind of how do we think about the long term and how do we grow our business. The other thing I would say is, when we think about our full-serve business system, we've been hitting 80-20 hard. We've put a little bit of a dampener on some of the growth as we've been focusing on our margins and cleaning up that portfolio. The heavy lift of skew reductions is essentially complete and now we've launched commercial excellence. And so we're about six months into commercial excellence. We believe we have a long way to go. We are in the very early innings here. And that, again, gives us a foundation to grow the business for years to come. And so, yeah, I think, you know, mid-single digits here on the long-term 2030 makes a lot of sense. We've got many levers to pull to drive that growth. And, you know, we need the macro environment to hold up. But right now, we think the megatrends and what's going on in the world should support this target, and the team is very focused to drive this growth.

And Amit, the other thing that I've mentioned, and this is more formulaic in nature, is that if you look at our backlog conversion in 2026, which is a bit of a headwind in terms of organic growth with the nuclear component, that's really a tailwind for us in terms of 2030 targets. So we've got a large portion of our backlog that's going to materialize over the next five years and really presents an opportunity for us to compound from a revenue growth perspective.

Right. I guess that was my point, right? At the end of the day, if you look at the compounded growth over time versus what you're doing in 26, it implies to step up in 27 to exactly that point. Can I just ask another question on general industrial and what you saw? Because obviously there's this view right now that cyclicals are doing quite well because of this anticipation of some improvement. Are you seeing any evidence of that in your bookings? And then just related to that backlog conversion, I think you might have mentioned that earlier. I joined a little bit later, but is there an EPS cadence that gets maybe pushed out a little bit more to the back end because that backlog is converting a little bit later?

Yeah, I'll let Amy hit the backlog conversion. I'll start on the general industrial side. So general industries has been really strong for us this year. We continue to make progress. A lot of that's part of our 3D strategy and the diversification and just getting the teams very focused in this market. And so I think we've been able to take a little bit of share here as we lean in on the diverse and markets that we've got a product in offering for, and, you know, quite frankly, we're seeing nice growth in North America, parts of Latin America on general industries, and then there's parts of the Middle East that this is working as well. Some of the themes here would be the water markets, pharmaceuticals, and then just, I'd just say, just kind of broader industries across the board where we're able to put full control product in.

Yeah, and from an EPS cadence, obviously, it's going to be impacted by some of the revenue cadence that we talked about. We're really going back to a more typical flow-serve year, which looks more with the first half being muted from a volume perspective, we're still confident about our ability to perform well and expand margins over that period of time, but probably about 40%, maybe Maybe a little bit more of our EPS will come in the first half of the year with the remainder in the second half. And as is always the case, our first quarter, we would expect to be the lowest quarter of the year from an EPS perspective.

Got it. That's very helpful. Congrats, guys. Thank you very much. Thank you.

We'll take our next question from Joe Giordano with TD Cowan.

Good morning, guys. Good morning, Joe. So, we've touched on this, but, like, on the 2030, you know, how much of that margin guide is dependent on volume? Because, like, if we're being fair, that's where you're going to get the biggest pushback, the mid-single-digit order growth this year. You know, a lot of that's probably in 2Q on an easier comp. Like, organically, we just haven't seen really going above that 1.25 with, like, a thrust. So, like, if I told you that the top line, if I wanted to push back on that a little bit, how much of that margin do you think you still get independent of volume?

Yeah. So, I'll start. I'm sure Amy will chime in on this one, too. I'd say, you know, we feel really good about our ability to drive margins. And so, when we think about our plan, the way we look at things is the initiatives and the actions we need to do to drive margin expansion. And if you kind of look backwards, right, we haven't had significant revenue growth over the last two years, but we've been able to expand margins significantly. And so, you know, obviously some of the, I'm not going to call it low-hanging fruit because it was a lot of work, but a lot of the bigger, you know, gains have been realized and we've got what I'll call, you know, to get to the 20%, a steady progression of margins of 500 basis points or 100 basis points approximately every year. And, you know, I just think through operational excellence, 80-20 still has more room to run. The ability to continue to get a better mix with aftermarket all gives us confidence that we can continue to do this. And so, you know, obviously revenue growth and leverage would help us substantially, but I feel confident that we can get to these margins even without significant revenue growth.

Yeah, and the only thing I'm going to add to what Scott has said is those actions have begun. So as I referenced in my remarks, roofline actions are accelerating. We're seeing the benefits of 80-20. That program is well-established now within our BU's and as part of our business system. And so we feel very confident that the actions have been put in motion to help deliver those margin or to help deliver those improved margins regardless of what happens from a volume perspective that said it's a two-pronged approach we are we are focused on growth commercial excellence is in its early days I'm excited about that program I think it's something that's going to pay pay dividends and so when you when you combine the focus on commercial excellence with the end markets that we're serving, I think it's going to be a good recipe for revenue growth over time.

Fair enough. And then on, you're making a bet here on nuclear both with your wallets and with your messaging and I think all of us understand why. If for whatever reason, like the power build out is just significantly more gas turbines and things like that, and less nuclear than what the current view is. What are the implications for FlowServe in terms of, I know you're on those things, but lower content and what that would mean for like these targets and things like that?

Yeah, I mean, I'll just start by saying we do believe that nuclear progresses forward. I've had several conversations with customers, you know, even in the last couple weeks. And so, I just think nuclear has to be a part of the equation as we go forward. You know, let's just say that it's not as optimistic as some of the numbers we put out in Q3, which I think we're, you know, right down the fairway of what would be kind of public commentary on nuclear growth. But if that weren't to happen and the shift goes toward more of the traditional power, we're well positioned for that growth. Like, we've got products that support, you know, single cycle, combined cycle. We can support coal in China. We, you know, we did a little bit of content on some of the renewables as well. and so you know maybe the content isn't as high you're certainly the barriers to entry in those products are not the same as nuclear but will still drive growth and we're well positioned to do that as we go forward the Trillium acquisition supports that as well right so they have a nice traditional power part of their business and we'll continue to work that and then finally I just say that you know on the aftermarket side we continue to get we'll continue to get the nuclear aftermarket and even on the traditional power side, you know, folks are investing in, you know, whatever form of power generation to do an upgrade or a re-rate or get more capacity out of that asset. And so, as that work evolves, we're typically well-positioned to get the aftermarket work around both traditional and nuclear.

Thank you.

We'll take our next question from from Andy Keplowitz with Citi.

Hey, good morning, guys. This is actually Jose Solca on for Andy.

Yeah, hey, good morning, Jose.

Hey, good morning. I did want to touch on MOGUS. It seems like you've been able to integrate that now and you're getting that accretion to segment margins. So maybe you can talk a little about what you've learned from that integration.

But I'm also curious if you could talk about what you're seeing for bookings opportunities for that business, given that MOGUS is about 60% percent mining exposed and some of the mining lead through there's been recently has been positive yeah absolutely so we remain incredibly excited about the the mogus transaction and the product we got and as a reminder for folks this is a critical service ball valve kind of at the highest end in terms of you know the the coatings and that the technology and it works in the harshest environments and so it works in refining harsh chemicals and then on mining is part of the kind of that acid leaching process to extract minerals that would be, Amy likes to say this, measured by the ounce and not the ton. And so these are the precious metals. And so we feel good about the end markets here. The bookings, I'll just say quite frankly, in 2025 were slow to materialize. The project funnel for 2026 looks really healthy. And so we've got a good line of sight in terms of the ability to grow this business. Just on the integration, I would say we followed what I would call a very traditional playbook in terms of how to run an integration. We had our day one activities. We implemented the post-serve business system. We drove towards synergies, very much a programmatic way or approach to do this. And I couldn't be more pleased with the kind of the process and the results of the integration itself. And so, you know, everyone got paid on day one. we moved our systems conversions over very quickly we got you know we got the business system in place we did massive fixes on the shop floor it looks completely different than what it did a year ago and we're able to serve our customers at a much higher level and so with all of that you know the margins have moved up significantly and progressively throughout the year and we're confident we've got a really nice business as we go forward in 2026 and And, Jose, one thing I might add on this one as well is this is a technical sale in terms of the types of valves that MOGUS is.

As part of our commercial excellence program, we have trained over 100 of our valve salesforce members on the MOGUS valves technically and vice versa within the salesforce that we brought with us from Mogus on our severe service applications and products and so we really feel like going into 2026 we're well positioned in this area of the business.

Thanks for the color. I did also see there was a comment on the slides about you guys having fully mitigated tariff impacts in 2025 and I'm sure that wasn't easy but with regards to the 2026 guide I'm curious if you guys could talk about what you're taking in for tariffs and how much of the higher metal prices is accounted for in the guide currently.

Yeah, so the team's done a really nice job in what I'll call an incredibly dynamic environment. And so, you know, we learned a lot of lessons with our supply chain team in 2020 and 2021. We've been able to implement that and put that in place here to really, you know, be more nimble than ever before. And, you know, we were able to successfully, through the combination of repositioning the supply chain and in driving some cost savings with supply chain combined with pricing actions to fully mitigate the impact in 2025. And I would just say the guide in 2026 is of tariffs. And so we believe that we can continue to carry that momentum forward. We're doing that through pricing and we continue to take supply chain actions. And hopefully we We won't be talking about tariffs for much longer, but you know, I can't predict that and so we'll continue to be nimble. We'll continue to be able to reposition, but we're in a really good place with the health of our supply chain and just our team has done a really nice job working through an incredibly dynamic situation.

Thank you very much.

Thank you. We'll take our next question from Brett Lindsey with Mizuho.

Hey, good morning, all. I wanted to come back to the procurement issue in the quarter. Can you just talk about the nature of the dynamic and which component you might be referring to and then anything on the remedy actions in place that give you the better visibility this year?

Yeah. I wouldn't necessarily call it a procurement issue. I'd call it, you know, delays in timing of receipts, not necessarily on one specific type of part or component, these things happen from time to time when they happen at the end of the year, it's a little bit more painful than others, but the supply chain is functioning well and we continue when we see isolated incidents like this, we deploy expediters to our vendors pretty quickly so we can get back on track.

Okay, great. And then just to follow up on nuclear, so on slide nine, you gave the content opportunity is now 15 to 20 percent on new nukes. Where was that previously? And just I guess the spirit of the question is trying to take your Q3 commentary and some of the dollar figures and where that's moved to with the content expansion.

Absolutely. No, it's a good question. It'll just be super clear. And so in Q3, we said for a new nuclear reactor, you know, and that's roughly the one gigawatt reactor, so the large ones, that flow serves historical content is roughly $100 million per reactor. Obviously, it depends on who the operator is and where it is geographically, but that's kind of our opportunity. Now with Trillium Valves, we believe that the $100 million expands by 15 to 20 percent, And so now we're at $115 million to $120 million per reactor. And so the other thing I would just add is we've done on the valve side, we've done really well on our main scheme isolation valve, which is a gate valve technology. We've done well on actuators also. With Trillium, we pick up essentially four new products. And so we get a triple offset butterfly valve that's nuclear certified. We get a check valve. we get a different type of actuator and we get a control valve and so we're pretty excited to round out that portfolio and that's what increases our content and so this is something that our team is really excited to get a hold of and get in front of the right customers and grow our nuclear opportunity. Thanks for the detail.

Thank you we'll take our final question from Nathan Jones with Steeple.

Hi this is Andres on for Nathan Jones thanks for take my questions. Just regarding 80-20, you talked a little bit about this earlier, but maybe after two, three years of 80-20 implementation, can you maybe talk about successes that one of the companies still needs to improve? You made note of a couple improvements earlier, just to round it about.

Sure. Yeah, 80-20 is a great thing to talk about. And, you know, we're incredibly excited about the success that we've achieved on 80-20. And, you know, we're now kind of going into the, you know, we're in our third year. It'll be the second kind of full year of this, but all of our product business units are now fully on the 80-20 program. We've seen incredible success on the reduction of complexity, a more focused organization. We're seeing the margins come through, and we're also starting to see growth where we focus on our best products and our best customers, and in the Q3 earnings deck, we put some numbers out on one of of our business units, actually the industrial pumps that was our initial one. And so just as a reminder, we showed 150 basis points of margin improvement with industrial pumps attributed to 80-20. We saw 45% skew reduction. We saw a 21% increase in that target selling. And I would say that that is represented across all of our business units. And we certainly expect to see similar wins as we go through the 2026 program. You know, companies that do this incredibly well would see roughly 100 basis points of margin improvement a year, you know, over kind of a four to five-year period. And so I think we're fully on track. We've had a little bit more success in 2025, but I feel like we're going to be in a great place to continue our efforts. And the other thing I would just say is as we reduce complexity of the products, it just It just allows us to do things differently, operationally, potentially reduce our roofline over time and continue to reduce costs and the overall flow serve. And so this has been, quite frankly, an unlock for us and continue to be excited about the progress that we can make in 2026 and beyond.

Awesome. Thank you very much for that context.

And then just on the balance sheet, obviously still remains flexible after the deal with capacity for further capital allocation. And is the focus on just maybe further M&A or the integration trailer in the short term?

Yeah, so we do feel like we're in a great place from a balance sheet health perspective about one-time net levered at the end of the year. And so it does give us an opportunity with the substantial cash flow generation that we have and expect to continue to have to look for ways to allocate capital to create value from our shareholders. I think the last six months has been a really good roadmap of how we think about capital allocation we've been relatively balanced but in sitting 2025 we saw a really great opportunity to invest in flow serve and so we bought back about 250 million shares at a attractive valuation and and you also saw to be active in the M&A space and so whether it's the small tuck-in that we had with with GreenRay or the slightly larger Trillium announcement from today we think that M&A can play a role in growth of the business and just remind everyone what our filters are when we look at that one it's got to fit the strategy and we look at Greenway from an aftermarket perspective in the ability to expand that business and you look at Trillium in terms of the diverse markets that they serve including including a really heavy emphasis on on power and both tick the boxes there and then lastly you know we're going to do this in a way that financially makes sense so we expect accretion to margins and cash flow and we're going to protect our balance sheet going going forward but we're excited about about the ability to really continue to broaden the product portfolio to continue to make our end markets very resilient and in using M&A to do that that's great context thank

you very much that will conclude our question and answer session at this time I'd like to turn the call over to Brian is out for any additional or closing remarks yeah thank you to everyone for joining the call today one item I'll note we are planning to host an investor day later this year to provide further insight on our strategic and financial plans we're going to provide more More information soon.