Good day, and welcome to the Flowserve third quarter 2026 earnings call. Today's conference is being recorded. At this time, I would like to turn the conference over to Olivia Webb, Director of Investor Relations for Flowserve. Please go ahead.
Thank you, and good morning, everyone. Welcome to Flowserve's third quarter 2026 business update. I am joined by Scott Rowe, Flowserve's President and Chief Executive Officer, and Flowserve's Chief Financial Officer, Brian Ezzell. Following Scott and Brian's prepared remarks, we will 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 materially due to risks and uncertainties. Please refer to additional information, including our note on non-GAAP measures in 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, Olivia. Good morning, everyone. To start, I am excited to have Brian Ezzell on our executive leadership team in his new role as Chief Financial Officer. He brings deep financial and operational experience, strong knowledge of our business, and trusted relationships with the investment community. Since Brian stepped into the CFO role, we have already had the opportunity to visit a number of our teams around the world, and I look forward to working closely with him to advance our financial objectives and continue creating value for shareholders. Turning to slide three, we delivered exceptionally strong bookings and continued margin expansion, earnings growth, and healthy cash flow in the third quarter, building on our first half performance. These results reflect the disciplined execution of our associates worldwide through the Flowserve Business System and solid demand across our end markets, despite the ongoing headwinds from the Middle East.
Bookings grew 14% year-over-year to $1.4 billion, with strong growth in both aftermarket and original equipment. Adjusted operating margin expanded 170 basis points to 16.5%, and adjusted earnings per share grew 19% to $1.07 versus the prior year period. Sales of $1.24 billion were in line with our expectations. Reported sales were up 5%, and organic sales were down approximately 1%, reflecting the continued impact of the Middle East conflict along with our 80/20 portfolio actions. Our teams around the world remain focused on serving our customers, executing with discipline, reducing complexity, and delivering consistent financial results. With three quarters behind us, we are updating our full year guidance, including revising our sales outlook due to the increasingly challenging operating environment in the Middle East and raising the low end of our adjusted EPS guidance range to reflect strong year-to-date performance and confidence in fourth quarter earnings.
Let's turn to third quarter bookings on slide four. Our book-to-bill was 1.12 x for the quarter, with total bookings up 14% on a reported basis and 8% organically versus the prior year period. Aftermarket bookings increased 11% year-over-year to $728 million, marking our fifth consecutive quarter above $650 million and our first above $700 million. Our expansive installed base, quick response center network, and local service capabilities continue to differentiate us. While customization, maintenance activity, and order timing can influence quarterly demand, faster quoting, better account planning, and disciplined opportunity management help our teams deepen customer relationships and capture more work across our installed base. Original equipment bookings grew 17% to $656 million, reflecting strength in power and nuclear and solid project activity across end markets, including one larger award in the energy end market.
Healthy end market demand and the commercial discipline of the Flowserve Business System are driving bookings growth. We remain focused on opportunities that play to our strengths, offer attractive margins, and create long-term aftermarket potential. As we continue to mature our commercial excellence initiatives, we are beginning to see improvements in order win rates and automated lead generation conversions. Over time, we believe improved selling capabilities and more focused product offering and an optimized product cost structure create opportunities to continue accelerating growth. We ended the quarter with record backlog of $3.5 billion, up 4% sequentially and 20% versus the prior year period. Moving to slide five. In energy, bookings grew 40% in the quarter and 25% year-to-date, supported by global project awards, including a refinery upgrade in the Middle East and further bookings on a large LNG project in Canada.
Utilization rates remained elevated at large process facilities around the world, most notably in North America, as the Middle East conflict influenced activity beyond the region. We are now seeing more customers deferring non-critical maintenance and larger turnarounds impacting our book-to-ship activity, which we had largely anticipated given the significantly higher utilization rates. Separately, we are seeing increased energy investment in other countries as customers prioritize energy security within their region. Energy market fundamentals support continued investment in reliable infrastructure and efficient operations. Our longstanding energy leadership and customer relations position Flowserve to capture opportunities across refining, LNG, pipelines, storage, and aftermarket services as energy security investment grows. Power bookings grew 23% in the quarter and 12% year-to-date, supported by nuclear and traditional power generation, including benefits from the Trillium acquisition. Nuclear bookings were over $115 million, driven primarily by life extension project awards in the United States.
Demand across existing reactors, life extension programs, and new builds remains encouraging, and our product portfolio positions us well to support growing global power needs. We continue to believe that nuclear power will play a large role in the overall energy mix around the globe. As we've shared in the past, anticipating the exact timing of nuclear approvals and related bookings is difficult. But we're working closely with our customers, and our teams are prepared to support this exciting opportunity. General Industries activity remains strong. However, due to a difficult comparison with the prior year, bookings declined 8% in the quarter and 1% year-to-date. Within General Industries, pharmaceuticals, water, and mining grew in the quarter, and we continue to see growth opportunities across these sectors.
We believe increased investment in pharmaceuticals has the potential to represent a meaningful opportunity over time, supported by our unique product offering and strong engineering capabilities. We also see emerging opportunities in data center cooling as larger systems and the shift toward liquid cooling increase heat management demands, creating a potential role for Flowserve's flow control technology, global scale, and ability to deliver reliability throughout the life cycle of the data center. Chemical bookings are roughly flat in the quarter and grew 3% year-to-date, consistent with our expectations. While activity remains measured, the market has remained largely stable. The overall picture across the industrial landscape, and specifically for critical infrastructure solutions, is encouraging, with healthy fundamentals across our end markets.
Our forward project funnel expanded during the quarter, while underlying conditions continue to support global aftermarket growth, positioning us to deliver mid-single-digit organic bookings growth for the full year and reinforcing our confidence in continued progress toward our 2030 financial targets. Turning to the Middle East on slide six. Business conditions became progressively more challenging late in the third quarter and worsened further in October, including in areas where we have a larger proportion of installed base. We continue to monitor developments closely, balancing the support of our customers across the region with the safety of our associates as the top priority. The third quarter sales headwind in the Middle East of roughly $40 million was modestly larger than our expectations.
Given recent conflict escalation in the region, we anticipate continued headwinds in the fourth quarter as customer site access and equipment acceptance continue to affect deliveries and run-rate product and service work. We have seen no change in cancellation rates in the region, which remain immaterial. Middle East project activity remains moderately active given the conflict in the region. However, we have seen a few projects in our pipeline that have shifted into 2027. While Middle East rebuild bookings in the quarter were modest, additional damage in the recent weeks leads us to believe the potential incremental rebuild opportunity now exceeds our Q2 estimate of approximately $50 million. Timing will depend on customer readiness, site access, and regional conditions, but we remain optimistic about the opportunity to serve our customers as they restore and repair their assets to full operational status.
Separately, we continue to discuss infrastructure resilience and redundancy with customers, including pipelines and storage facilities. These remain potential projects rather than committed orders, with bookings more likely to occur in 2027. Our established regional presence and customer relationships position us well to support this work. Despite the near-term challenges, we believe the underlying need for critical infrastructure maintenance, reliability, and investment remains intact. Our regional footprint, long-standing customer relationships, and extensive installed base position Flowserve well to navigate this disruption while continuing to support customers' evolving infrastructure needs. Turning to slide seven. The Flowserve Business System continues to strengthen execution, accountability, and earnings power. Our progress puts us on track for roughly 16% adjusted operating margin this year as we advance toward our 20% target for 2030. Our progress in portfolio excellence is a clear example of this transformation.
Now in the third year of our 80/20 work, we continue to simplify the business and focus resources on our strongest products and best customers. We believe the 80/20 program can deliver at least two more years of margin improvement. We are applying the same discipline to Trillium, with the 80/20 quadrant analysis now completed and implementation of actions underway. Overall, Trillium is performing in line with our expectations, and we anticipate margin improvements moving into next year as portfolio actions, further complexity reduction, and integration synergies take hold. Portfolio simplification and manufacturing productivity improvements are enabling us to accelerate further roofline consolidation. Several actions are underway, including moving work from higher-cost locations to lower-cost sites within the same region or hemisphere.
Over time, we believe footprint optimization has the potential to deliver meaningful cost savings and efficiency gains, making it a key driver of margin expansion toward our 2030 target. Looking ahead to 2027, a larger backlog, strong project funnel, and continued execution of Flowserve Business System position us well for further progress. While uncertainty in the Middle East may influence the timing of customer activity, we remain confident in the underlying demand environment and our ability to drive profitable growth, expand margins, and advance toward our 2030 financial objectives. I'm proud of our associates for their resilience, flexibility, and disciplined execution of the Flowserve Business System, which continues to create value for customers and shareholders and reinforces my confidence in delivering our long-term objectives. With that, I'll turn the call over to Brian to walk through our financial results and outlook in more detail.
Thank you, Scott, and good morning, everyone. It's an honor to be joining you today in my new role as CFO. Flowserve has a tremendous foundation to build upon and significant momentum toward our longer-term growth and margin expansion goals. I'm excited to be partnering with Scott and the broader team to accelerate growth and our operational progress while maintaining the financial discipline that supports our strategy. With that, let's turn to slide eight. Our third quarter results reflect continued execution and progress on our financial objectives. Sales of $1.24 billion were in line with our expectations. Reported sales increased 5% versus the third quarter of 2025, and organic sales were down 1%. Aftermarket sales grew 12%, while original equipment sales declined 2%, reflecting the timing of our growing backlog converting sales.
Walking through the year-over-year sales bridge, underlying growth of approximately three percentage points was offset by approximately three percentage points from Middle East disruption and approximately one point from our 80/20 portfolio actions, resulting in an organic sales decline of 1%. Acquisitions and divestitures, including Trillium, added 670 basis points, while foreign exchange was roughly neutral, bringing reported sales growth to 5%. We ended the quarter with backlog of $3.5 billion, the largest in Flowserve's history, up 20% year-over-year and 4% sequentially. Adjusted gross margin expanded 190 basis points to 36.7%. Adjusted operating margin expanded 170 basis points year-over-year and 120 basis points sequentially to 16.5%, outpacing our expectations and reflecting positive incremental margins on an organic basis. Aftermarket mix, 80/20 benefits, and operational execution drove the improvement, partially offset by higher SG&A. Adjusted earnings per share grew 19% to $1.07, ahead of our expectations coming into the quarter.
Turning to slide nine. Both segments continued to execute well and advance our full-year priorities. FPD bookings grew 15% to $940 million versus the prior year period, up 11% organically, driven by energy and power projects and strong aftermarket demand across our installed base. Sales increased 4% to $830 million, down 1% organically, reflecting softer Middle East book-and-ship work and the timing of our growing original equipment backlog converting to revenue. Adjusted gross margin expanded 220 basis points to 38.1%, and adjusted operating income grew 15% to $181 million. Adjusted operating margin expanded 220 basis points to 21.8%, driven by mix benefits, 80/20 actions, and improved project execution. Moving to FCD, bookings grew 13% to $446 million versus the prior year period, up 1% organically. Sales increased 9% to $412 million, down 1% organically, reflecting softer Middle East book-and-ship work and anticipated 80/20 headwinds.
Adjusted gross margin increased 110 basis points to 33.2%, and adjusted operating income grew 9% to $67 million. Adjusted operating margin was flat year-over-year at 16.3%, with lower Middle East run rate volumes and, to a lesser extent, the addition of pre-synergized Trillium weighing on the results. We expect the modest margin headwinds in Trillium to improve as we fully integrate and execute our 80/20 actions. Moving to slide 10. We generated $144 million of operating cash flow in the third quarter, driven by strong earnings performance, partially offset by higher working capital in the Middle East and a modest use of cash for our accelerated footprint realignment. Free cash flow was $127 million in the quarter, representing a 92% conversion of adjusted net earnings.
Given working capital headwinds from delayed Middle East shipments and modestly slower collections, we now anticipate full-year 2026 free cash flow conversion of approximately 80% of adjusted net earnings. We expect fourth-quarter cash flow to improve sequentially, reflecting our typical seasonal patterns. Our balance sheet remains very healthy, with adjusted net leverage of 1.5 x, providing flexibility to invest in the business and execute our capital allocation framework. We returned $78 million to shareholders in the third quarter, including $28 million of dividends and $50 million of share repurchases, bringing year-to-date repurchases to $75 million. Our board of directors also recently approved increasing our share repurchase authorization to $500 million, reinforcing our commitment to creating long-term shareholder value. We continue to view share repurchases as an attractive use of cash when we see dislocation between our share price and our view of the company's intrinsic value.
Turning to full-year outlook on slide 11. Exceptional bookings growth is expanding our backlog and strengthening confidence in future revenue growth. However, as Scott summarized earlier, dynamics in the Middle East became more challenging later in the quarter, with October continuing to see further disruption in the region. We are updating our outlook to reflect the recent changes and additional uncertainty in the Middle East environment. We now anticipate full-year organic sales to decline 1.5%-2.5%. This outlook reflects lower book-and-ship activity in the Middle East, as well as some modest impact to our global aftermarket book-and-ship activity as process industries operate at full utilization rates. Total sales are now expected to grow 2%-3% for the full year, reflecting the revised organic sales outlook and modestly higher contribution from acquisitions, which have performed better than originally anticipated during integration.
Given the over-delivery margin in the third quarter, as well as the strong execution trends from our teams around the globe, we are raising the low end of our EPS range and now anticipate full-year EPS to range from $4.10 - $4.20. At the midpoint, this represents 14% EPS growth and assumes roughly 150 basis points of margin expansion versus last year. For the fourth quarter, we expect organic sales growth in the mid-single digits and total sales growth in the low double digits, driven by backlog conversion, continued aftermarket strength, a sequentially smaller headwind from our 80/20 actions, and the benefit of Trillium, partially offset by lower Middle East book-and-ship activity. Fourth quarter adjusted operating margin is expected to expand sequentially from the third quarter, driven by volume leverage, mix, ongoing benefits from the Flowserve Business System, and the realization of certain Trillium integration synergies.
In closing, our third quarter bookings growth, margin expansion, and higher adjusted earnings per share reflect continued execution. Our year-to-date performance and strong project pipeline give us confidence entering the final quarter as we continue to manage uncertainty in the Middle East. We remain focused on disciplined execution through the Flowserve Business System, cash generation, delivering on our commitments, and advancing toward our 2030 financial targets. With that, operator, please open the line for questions.
Thank you. If you would like to ask a question, please signal by pressing star one on your telephone keypad. If you are using a speakerphone, please make sure the mute function is turned off to allow the signal to reach our equipment. Again, press star one to ask a question. We will pause for just a moment to assemble the queue. We will take our first question from Mike Halloran with Baird.
Dave, good morning, guys.
Hey, Mike. Go Brewers.
Oh, a lot of happy people in the state of Wisconsin today.
I am sure there are.
Yeah.
I will not even ask how much you slept last night.
A good three and a half hours.
There you go.
I appreciate that, as I do. Could you just talk about—
Yeah, congrats.
—the visibility getting your own trends a little bit here. Maybe strength of funnel, what the quoting activity looks like, how you think that conversion of the funnel is going to track. Obviously, some delays in the Middle East, but it sounds like the activity or the potential there is a little higher today. Not just Middle East, maybe kind of a broad thought process on how that's tracking.
Sure. Yeah. Maybe we'll just start with the quarter. We're super excited about the bookings. Obviously, a $1.38 billion number is a big number for us with record aftermarket bookings. As we think forward, right, I mean, that's a big number. I don't want to say we're going to deliver that every quarter, but I would say generally speaking, we feel constructive about the forward look on both projects and aftermarket, and maybe kind of I'll break that down a little bit. First I'll start with commercial excellence, right? We've been leaning in on commercial excellence for over a year now, very much focusing on account management, order tracking, pursuits, conversion rates, like all of that good stuff. I think some of that work is now coming to fruition, and so we're excited about that.
On the aftermarket side, it's really about winning and capturing the work from our installed base, and the teams have done an incredible job with that. So we fully expect we can continue to grow aftermarket at a healthy clip, even higher than our mid-single digit growth rate target on an overall basis. Then maybe on the end markets and projects, we believe we've got really nice kind of sectors that we're working in that have room for growth for at least into 2027, and we believe beyond that. When you look at the big markets that we like the most, it's power and nuclear is obviously growing at a really healthy clip. We're seeing both nuclear and traditional power. The funnel's up. There's lots of work there. We're incredibly well-positioned to win our share.
Energy security is a theme that's working around the globe, and we continue the good work and orders for that, and the funnel is healthy as we think forward. Then the Middle East is a whole different topic, but at some point, there's a rebuild and a resilience activity and investment in the Middle East. As you know, we're very well-positioned there. Then finally, within general industries, there's some really select growth areas that we believe that we can position the portfolio to grow. So I think we're leaning into growth, and we feel that we've got the ability to grow the bookings rate and ultimately the revenue here for years to come on the forward look.
Thank you for that. Helpful. Maybe help me understand what the backlogs and the strong backlog levels means for next year. I know some of that backlog, particularly the nuclear side, is longer dated, but maybe just a sense for the visibility that you have today on 2027, and maybe put some of that visibility in historical context and how much visibility you have now versus previous years and any other thoughts you might have there.
Sure. Mike, I'll start, and I'll let Brian jump in on this. We'll start with the record backlog of $3.5 billion. Obviously, we feel good about that. It positions us well for revenue growth in 2027. The book-to-bill year to date is 1.12, so that's another way to get at it. As we look at those two numbers, it really provides a healthy construct and setup for 2027. As you know, at the end of the fourth quarter, we'll provide the guidance like we always do. I don't want to get too tight in terms of what that looks like. We've got to deliver the fourth quarter, both on bookings and sales. I would say right now we feel really good going into the year.
Yeah, Mike, I would just add on the backlog specifically, if you go back in time, our backlog at one point, about 90% of that was converting in the next 12-month period. That percentage has moved a bit lower over the last couple of years, really with more nuclear work in the mix. I think we came into 2026 with that number around 75%-76%. We'll see where we land going into next year with that percentage. I don't expect a major movement. There will be some elongation for nuclear as we add larger projects. The rest of our project work that we're seeing right now, so the bigger projects in the quarter, is not really elongated, so it's kind of typical project work. Nothing unusual there.
Obviously, the backlog that is related to aftermarket turns relatively quickly, so we should be relatively balanced year-over-year in terms of backlog conversion.
Thanks, Scott. Thanks, Brian. Appreciate it.
Yep, thank you.
We will take our next question from Andy Kaplowitz with Citigroup.
Good morning, everyone.
Good morning.
Hey, good morning, Andy.
Scott, maybe just focusing a little more on the aftermarket bookings. I think you are recording that kind of growth without a ton of refinery turnaround, so maybe you could give us more color into what is driving the aftermarket strength. I think you talked about improving capture rates. So where are you in terms of your own initiatives at capturing your installed base, and where could you go in 2027 and beyond?
Yep. Yeah, the aftermarket is really performing at a high level, record bookings in the quarter at over $700 million. I just want to say, the team is working hard, they are leaning in, and they are supporting our customers with their needs and repairing work, providing spare parts, and doing the service that is needed. So again, I will kind of point back to commercial excellence as we look at account management, understanding where the installed base is, and really then focusing on speed, right? Speed to quote, speed to deliver, responsiveness within that whole cycle. The more we do that and the better partnership we have with the customers, the higher the capture rate moves.
So we have been excited about what we have been able to do there over the last two to three years, and we feel very confident in our ability to continue to move capture rate up. I'll also say there's a weird dynamic going on right now, and it's mostly North America. We'll just use North America refinery, but it's a couple other industries as well. We've got incredibly high utilization rates on the back of high profitability. What we're seeing is a little bit of a slowdown on parts and services, but we are seeing replacement activity at a very high level, which is still converting to really healthy bookings. They are delaying some spending around the maintenance programs.
We believe in 2027 that that delay can't last a whole lot longer. We feel that 2027 should be a really nice year for growth as we look into that year with our customers, and particularly on the North America refining side.
That's helpful. Then just focusing on margin for a second, you ended up recording good sequential incremental margin in Q3 in FCD. It's despite Middle East weakness. I'm sure there's inflation out there for you. How do you think about the puts and takes of FCD margin as you go into 2027? You mentioned footprint consolidations. I assume that's going to start helping you a little bit more. Does FCD start to close the gap on obviously good FPD performance?
Yeah, I'll jump in, Andy. I'd say when we look at the quarter, it was good performance for FCD, and that team continues to make progress on our longer-term goals. I say when you look at the third quarter, the Middle East was a drag, which you mentioned. That's roughly 100 basis points of headwind in the quarter to FCD. The team continues to make progress despite the impacts we're seeing there. When the conflict in the Middle East evolves and changes, then we'd expect that to create some tailwinds. I would say as we look into fourth quarter and then into next year, we continue to make progress. We do expect footprints and the actions we've taken will begin to drive some enhancements to the margin structure.
Trillium as well, there's some synergies that are coming through on the business as we integrate, and so that will provide some tailwinds. I think a little early to provide too much in terms of specifics, but we are making progress. I think structurally, we believe this business over time will be around the FPD margin. The work is underway to get us there in terms of the Flowserve Business System with our 80/20 efforts and Operational Excellence, but we're making good progress and on track to deliver on our longer-term goals.
Appreciate the color, guys.
Yep.
We will take our next question from Nathan Jones with Stifel.
Good morning. This is Adam Farley on for Nathan.
Yeah. Hey, Adam.
Maybe we can drill a little bit more into the energy orders in the quarter. Maybe just talk a bit about the impact from the large project you won, and then maybe ex the large project, just the health of the underlying market within energy.
I would say it is generally healthy project environment in the quarter. We had one large project in energy that was greater than $50 million.
Outside of that, though, it was small to mid-size projects. So I would say, kind of our normal project look. If you exclude the $50 million order, it was still a really healthy OE for us. I would not say that the results were dependent on one or two large orders. We had one really large order that we are proud of and we are excited about, but the underlying health of the market was solid. I said this in the first question, but as we look forward, the project funnel is still healthy. I think the Middle East timing is there is projects in there that are definitely at risk to moving out, just given some of the dynamics in the region. But overall, I think we still are constructive about what projects can do for us on the forward look.
That is helpful. Switching gears maybe to FPD margins, continues to perform very strongly. Maybe just talk about the sustainability of the margin profile within FPD, and how should we think about incremental margins on growth within the segment? Thank you.
Yeah. Happy to. Look, we feel really good about what the FPD team has delivered. They continue to make progress in the margin structure, and we see room ahead. I would say in the quarter, really favorable in terms of 80/20 benefits, project execution. There was a little bit of mixed favorability in the quarter, and that tends to ebb and flow quarter to quarter, so we see that move around 30 - 50 basis points quarter to quarter. But underlying margins, really healthy and strong and, we believe, very durable. That speaks to a couple of components. The Flowserve Business System delivering. I would say the aftermarket business is really strong in FPD, and that brings with it improved margin profile.
On the OE and project side, the teams continue to execute very well, and so we are delivering projects on time or even a little bit better than expectations that we have going into project work. As we look forward, there are actions that the team continues to take and believe that we can expand margins from here. I would say on the FPD side, obviously margins are kind of in the range of our peer set, and so we feel really good about where we stand. Really, that team is more focused on growth over time. Again, we will continue to push on margin opportunities and enhancements, but I would say more of a pivot to how do we accelerate growth in that business.
We will take the next question from Joe Ritchie with Goldman Sachs.
Hey, guys. Good morning. Brian, congratulations on the new role.
Yeah. Thanks, Joe. I appreciate it.
Yeah, of course. I am just curious on the Middle East and how you see this playing out. Obviously, there is a lot of uncertainty in the region. We are estimating that the headwind this year is going to be north of $0.10 at least. If things stabilize in the region, how does that potential headwind this year turn into a tailwind next year, and is there any risk of project cancellation? Any color you can provide on what is going on the ground and the impact that you are seeing this year would be helpful.
Yeah, Joe, that is a difficult question because you are asking me to predict peace in the Middle East. Here is what I would say, a couple things is just grounding for everyone. We have got an incredible presence in the Middle East. We have got good customers. We work very closely with them, and we are trying to do everything we can to, number one, keep our people safe and out of harm's way, and then two, support our customers in the best way possible. What I would say is in September and October, that got increasingly challenged as hostilities kind of moved and escalated in certain parts of the world or certain parts of the Middle East, where we have a very strong presence and strong operations. It is incredibly dynamic. It is difficult to predict what will happen next.
There is lots of rhetoric out there around our midterm elections and what could happen, and it is just difficult to say what this looks like. What I will say is, hypothetically, we do not necessarily need peace in the Middle East for our business to start growing. What we need is some form of ceasefire and hostilities to settle down. When and if that happens, we are positioned incredibly well to do a couple things. One is the repair work. We put a number out in the second quarter of $50 million. Given the events over the last couple weeks, that number is now higher. We know that there is more damage at sites that have our installed base and equipment in. We believe that number is higher.
We don't know exactly what that is until we can get to some of those sites and understand what the repair work and cycle looks like. That equipment will get replaced or repaired, and so we feel comfortable that that comes through. My guess would be that that's somewhere in 2027. The other piece is there will be a kind of a resilience and a redundancy. A lot of our customers are talking about how do they do things a little bit differently to provide a redundant pipeline or incremental storage, or just having resiliency in their network and their operations that allows them to continue to produce and export, given some of the potential hostilities. There are some very ambitious plans there.
We don't know what the timing looks like, and again, hostilities will need to settle down for that to take effect. Maybe the third lens is just the normal operations. The normal operations are the refineries and chemical plants and other various facilities, typically would run at an 85+% utilization rate. They're not running anywhere near that right now. At some point, those start to walk up, and when they do, our maintenance business with parts and services and replacement starts to pick up in a healthy way. We feel really good about the long term, I would say even the midterm and the long-term outlook in the Middle East. It's just the short term is really difficult to predict, given what's happening in the region.
Yeah. Super helpful answer, Scott. Just maybe my second question here. Look, the orders were strong across the board. It was interesting, though, that, and this is not to nit, but the general industry's bookings were down 8% in the third quarter. We're seeing several industrial peers continuing to report improving short cycle demand. I'm just trying to understand what's going on in that business. Was it just some project timing? Are you seeing maybe some broader underlying demand weakness? Just any comments around that would be helpful. Thank you.
Sure. Yeah, sure. Yeah, 8% down in the quarter was really on the back of a difficult comp last year where we had a big number. I think looking at the year-to-date number, we're still down 1%. With that said, we're pretty excited about the industries that we're playing in the general industry space. Water's been active for us, mining's been reasonably healthy, pharmaceuticals continues to grow. I would also add, there's other industries there that we believe that we can continue to push position our products and make a strong effort to continue to diversify our bookings and move into spaces that we find attractive over multiple years. We feel good about the outlook in general industries. I think the quarter comp was just a difficult one.
And then maybe just lastly, if you look Q2 bookings from a dollar basis, Q2 to Q3 expanded pretty nicely. So we saw growth sequentially, but the year-over-year comp was difficult.
Okay, fair enough. Thank you.
As a reminder, if you would like to ask a question, please press star one on your telephone keypad. We will take our next question from Brett Linzey with Mizuho.
Hey, good morning, all. Hey, wanted to come back to the data center comment. You talked about the life cycle opportunity. Maybe a finer point here. Is there any way to size the Flowserve potential wallet there in data center? Was it more just on a second derivative impact in gas plants operating at these high-duty cycles? Anything you can discuss on some of the traction there.
Sure. I would say I will start with the power side. We are seeing incremental demand on traditional and nuclear power, and we play in both. I think that data centers has been a large part of the incremental demand on power. Again, we have got products that are well-positioned in that space, and we are seeing the uplift already. Then on data centers themselves, I would say this is an emerging opportunity for Flowserve. We have historically been involved in this space, but in a very small level. Maybe the trends here that we are seeing will help think about what the potential is for Flowserve. But historically, the data centers have been HVAC or air-cooled, and now data centers, as they are getting significantly larger with much more thermal management requirements, and a much larger scale, you can imagine that they are moving more toward liquid cooling.
As that happens, then Flowserve has a right to play here. With the scale and with the international nature of this, the manufacturing capability, and then just the ability to provide a quality product that is reliable through the life cycle of a data center, these are areas where Flowserve has a lot of strength. I would say we are too early to size our opportunity, but we are having different conversations than we ever had in this space. I think that maybe the easiest way to say this is if data centers continue to grow and expand and get larger, then Flowserve will most likely be a part of this market on the go-forward basis.
Thanks for that. Then just to follow up on refining, so you had some pull-in on emergency repair, but some delays on maintenance across North America. Not a surprise there. Could you just size the revenue that got pushed out on maintenance in Q3 and the expectation for Q4? Just trying to think about what might get caught up in the next year. Thanks.
Yeah, I do not think we are going to provide an exact number. It is actually hard for us to calculate. Maybe, again, the two things that happened, so the emergency work is higher. So customers need the work, and we are there, and we are supporting on a very quick basis. The other thing we have seen is replacements, and so longer cycle replacements. So think, they want a new pump or a new valve versus a part or a service. So we have had healthy demand for those replacement items. But what we are seeing is what I call that normal kind of MRO parts service and smaller replacements has absolutely slowed down given the utilization. Again, I think maybe the important part here is utilization rates remain high. We think this will continue maybe through the fourth quarter into the first quarter.
But at some point, operators, and again, particularly North America refining, have got to spend money to keep these assets up and running. And so we feel pretty good that you're going to see an uplift in 2027 across the board on the aftermarket and maintenance spending at the refining sites.
Appreciate the detail, and congrats to Brian.
Thanks, Brett.
We will take our next question from Joe Giordano with TD Cowen.
Hey, guys. Morning.
Yep. Good morning, Joe.
You talked about roofline consolidation and footprint optimization and stuff. I feel like we've been talking about that even before you, Scott, before you even got to the company.
We did, Joe. We had a big program before I got here.
Yeah. Can you kind of catch us up on, from an outsider standpoint who is not actually, what is actually happening here? How far have we gone? When you talk about something for a decade, it is hard to think about how we are accelerating it. Maybe catch us up on where we actually stand there.
Yeah. No, it is a really good point, and we probably need to do a good job laying out what the prize is here and what we have done historically. As you remember, before I got here, so pre-2017, there was a massive, I think there was a public name on this, a realignment program, and we had a lot of dollars and a lot of savings. Maybe what I would just start with is the landscape at Flowserve from a manufacturing footprint standpoint is very vast. You had two companies come together almost 30 years ago now that did not do a whole lot of roofline consolidation. I would say a lot of our manufacturing is suboptimal in terms of size, and we have put different initiatives over different periods of time to drive that consolidation.
The other thing I would say is closing manufacturing sites and moving them to other locations is very difficult. If you do that with immature process or unclean data, you have significant problems. When I got here, we slowed down that program significantly. In the last three years, when we launched the Flowserve Business System and Operational Excellence, we have slowly began to get serious about the roofline consolidation. We have not talked about it a whole lot, but quietly over the last couple of years, we have done one, maybe two a year at larger sites, and we believe there is still a significant prize to move this initiative forward. On the back of Operational Excellence and portfolio excellence, we have got kind of two levers that are freeing up capacity, right?
The Operational Excellence is just driving productivity within our sites, and you are improving how we operate and manufacture and work the supply chain. Then the portfolio excellence is driving complexity out of our offering, which is also freeing up capacity within the manufacturing. With those two levers now fully in motion and moving rapidly, we are now seeing even a bigger prize on the roofline side. Again, we will provide more details as we go forward, but we think this is a meaningful opportunity for us to continue the margin progression and advance towards our 2030 targets.
And I am honestly surprised we have not really talked inflation on this call much. Steel prices are high. Freight costs are high. You guys make heavy things. What are you seeing here? How are you offsetting it? Are you able to reprice and get adjustments from customers to offset here?
Yeah, Joe, let me jump in. We have seen a little bit of modest inflation, and I would say our teams are working hard to make sure we offset that. And I will give a little bit of color there. One, our supply chain and procurement teams have become much more advanced in this space, and so we have good visibility to what is happening real-time or very near real-time, and we are able to move things around our supply chain and be flexible. And that allows us some ability to offset cost increases we might see in a particular geography. In addition, we do take a proactive approach in our project work in particular to make sure we have got contract terms that allow some flexibility on the price side.
We also order in timely fashion, so we try to match up orders with the work and make sure that we do not have risks in terms of exposure. And then obviously where we need to and we need to talk price, we are flexible. We have shown an ability to do that certainly last year with tariffs where we responded with price. And so, we certainly are able to do that where we need to. I would say thus far, the total impact has been relatively modest, and we have been able to offset through our own supply chain actions and sourcing options. As we get into later this year and next year, if price inflation starts to move on us, then we are prepared to take other actions. But thus far, we have been able to manage it within the overall portfolio.
Yeah. And maybe I will just add, this is certainly a credit to the maturity of the business system. And as you know, we have not always been good at managing price and cost, and our teams are doing a much better job understanding where inflation is, where our suppliers are, how do we work around that, how do we get the best deals, and how do we make sure that in the event that the cost is going up, that we are pricing for it accordingly. And so, I feel like we are in a good place. We have got to continue to manage it. It is a dynamic environment. It is an inflationary environment. But thus far, year to date, we have done a really nice job with this.
Is it fair to say that because aftermarket has been such a strong driver, that is helping you in a way because you can price that much more in real-time?
Yeah. Look, the aftermarket teams have done a really nice job, and the margins are higher there, and so that is certainly a component. But I would say our original equipment teams are doing equally as good. So, we are seeing margin progression across the product families and across our large projects as well. So, I would not say this is just an aftermarket phenomenon.
Thanks, guys.
We will take our next question from Zachary Walljasper with UBS Securities.
Hi. Thank you. I just really have one question. Can we go a little deeper on the nuclear awards? Nuclear awards have been solid so far this year. We have seen a number of nuclear awards over the past quarter. Can you just update what geographies, what type of facilities the team is seeing success so far? Thank you.
Sure. Yeah. Nuclear has been a bright spot for us really all year where we have delivered over $100 million of bookings every single quarter. Third quarter was a really strong quarter. Most of the awards in the third quarter were in the United States, so in North America. Almost predominantly, those awards were life extension or uprates and outages at the existing reactors. Again, I think it really provides context to our large installed base delivering orders for multiple years. We are excited about what we have done year to date in bookings and our ability to support our customers there. Then we are equally excited about the forward look. We still believe that nuclear is going to play a meaningful role in energy worldwide. We still believe there is significant opportunities for Flowserve. I would say the nearer-term opportunities will be in Asia and Eastern Europe.
The U.S. is still advancing a program. We are optimistic that that may happen this year, but it seems to be moving out a bit. Overall, we believe the nuclear mix and content will be significantly higher as we project over the next couple of years.
Okay. Great. Thank you so much.
There are no further questions at this time. Ladies and gentlemen, this will conclude today's call. We thank you for your participation, and you may now disconnect.