Flowserve at Baird Conference: Strategic Moves and Market Insights

Flowserve Corporation (NYSE:FLS) presented a robust strategic outlook during the Baird 55th Annual Global Industrial Conference on Wednesday, 12 November 2025. CEO Scott Rowe highlighted the company's strong Q3 results, driven by significant bookings and margin expansion. While Flowserve embraces a strategic shift towards aftermarket services and diverse markets, it also faces challenges like the recent merger fallout with Chart. The company remains optimistic about its growth trajectory.

Key Takeaways

• Flowserve reported Q3 bookings of $1.2 billion and an EPS of $0.90.
• The company's 3D strategy focuses on Diversifying, Decarbonizing, and Digitizing.
• Flowserve targets $10 billion in nuclear bookings over the next decade.
• A $200 million share repurchase followed the terminated merger with Chart.
• The company maintains a strong balance sheet with leverage under one times.

Financial Results

• Q3 bookings reached $1.2 billion, reflecting strong market demand.
• Earnings per share stood at $0.90, underscoring profitability.
• Flowserve allocated $200 million for share repurchases after the Chart deal fell through.
• Another $200 million was used to eliminate asbestos liability.
• The Industrial Pumps business unit saw a 150 basis point margin improvement.

Operational Updates

• The Flowserve Business System is enhancing operational efficiency and margin growth.
• Lean manufacturing and daily management practices are central to operations.
• Portfolio excellence, through the 80/20 methodology, is reducing complexity.
• The Industrial Pumps unit reduced SKUs by 45%, boosting margins.
• Record bookings in the aftermarket business highlight growth potential.

Future Outlook

• Continued growth is expected in the nuclear market, with Flowserve equipment in 75% of reactors globally.
• The aftermarket business is seen as cycle-resilient and poised for expansion.
• Revenue growth in 2026 is anticipated, though tempered by lower project bookings in the Middle East.
• New strategic targets will be set as current goals are achieved.
• Margin expansion will continue through operational excellence and strategic acquisitions.

Q&A Highlights

• Flowserve collaborates with around 10 Small Modular Reactor players.
• The company is confident in expanding its presence in both nuclear and power islands.
• General Industries has emerged as the second-largest category within Flowserve's portfolio.

For a detailed understanding of Flowserve's strategic direction and market insights, refer to the full transcript below.

Full transcript - Baird 55th Annual Global Industrial Conference:

Mike Halloran, Analyst, Baird: Hey, everybody. Mike Halloran with Baird here. Thanks for joining the Flowserve session. On stage with me, Scott Rowe. We've got a couple of people hanging out in the audience as well, including Amy and Aluya. We're going to do a pretty normal session here. Scott's going to lead in with some prepared remarks. We're going to follow that up with a fireside chat Q&A session. If you've got anything that you want to talk to, please email me. Raise your hand, and we'll make sure we address it. There should be cards in front of you for the email side of things. The hand raise, I'll just try to be observant. With that, Scott, please, Flowserve's, thanks for coming.

Scott Rowe, CEO, Flowserve: Yeah. Good afternoon, everyone. Thanks for being here in person. For those that are listening online, thank you for your participation. Mike, thanks for having us. This conference is one of the best industrial conferences every year, and we are excited to be a part of this.

Mike Halloran, Analyst, Baird: Thanks, Scott.

Scott Rowe, CEO, Flowserve: Just kind of overview on Flowserve and some general concepts. Mike's got a long list of questions that we can go through, and we'll answer any from the audience as well. Obviously, we just finished our Q3 call. Really strong results. We had very healthy bookings at kind of $1.2 billion. We had continued margin expansion. I'll kind of walk through why we believe that we can continue that margin expansion. We delivered $0.90 of EPS. It was a really good number for us and a good print. If we go back to kind of what's happening in the business, maybe two things. We've got a strategy, which is our 3D strategy of diversify, decarbonize, and digitize. That strategy has been in place now for several years.

We continue to see our business further diversify away from upstream oil and gas. That is working. When we look at the bookings for the quarter, less than 10% were large projects, which are typically that upstream oil and gas. We are seeing more aftermarket, more diverse end markets. The business is more resilient than ever before. On the decarbonization side, I'll come on nuclear, but you have got nuclear in there. We have got LNG in there as a transition, but also a little bit on carbon capture and some of the other things that are in decarbonization. We are still really excited about that lane.

On the digitized side, ultimately what we want to do is be able to support our customers with our pump and valve technology through instrumentation, through a digital overlay, allowing them to monitor, allowing them to prevent unplanned downtime through our prediction algorithms, and ultimately helping them with flow loop uptime and optimization. We are excited about that offering. We can get into it if we need to. Secondly, I want to talk about the Flowserve business system. We have a slide in the Q3 deck, and we are excited about what the business system is doing. For those that have followed us for a long time, I have been the CEO now for over eight years. It has been a journey. When I got here, we were not a process-focused organization whatsoever. We were furthest from that as you could ever imagine.

Today, we use the business system to really drive and run our business. It's how we do our work. We have five verticals there. We have a people excellence, operational excellence, portfolio excellence, commercial excellence, and then an innovation excellence piece of it as well. We take all of those pillars seriously, but I'll just touch on two because it's really what's driving our margin expansion. Operational excellence is very serious. It's a commitment to what I'll call lean principles, basics of manufacturing. Think shop floor daily management. How do you solve problems at the lowest level within your organization? How do we think about inventory management? How do we do material flow? All of those good things. We have seen tremendous results in all of our operations, and that has been driving a big part of the margin expansion.

Secondly is portfolio excellence. Within portfolio excellence is 80/20. We have fully committed to 80/20. We are in our second year. We put some metrics in our slides in Q3. Our first business unit, industrial pumps that has gone through this, is seeing tremendous results. Year to date, that business unit's up 150 basis points of margin. We have reduced 45% of all of the SKUs in offering, so massive complexity reduction with that overall offering. In our target selling, this is a framework where we say we want to support our best customers, and we call them out by name. Our target selling efforts have generated 21% growth within the business. We have also divested a piece of that business that is no longer core to what we are trying to do.

My point in saying all of that is 80/20 is alive and well. We are fully on the methodology, and we are making great progress. We are very excited about that. The last leg I will touch on is our commercial excellence. With 80/20 comes a little bit of downward pressure on your revenue as we are eliminating 45% of all of your SKUs. With that said, net net, we have done a nice job continuing to grow the business, but we needed to lean in on commercial and really drive growth. The commercial excellence is all about that, and we are excited about what we can do. Lastly, in Q3, we talked about what we believe is our entitlement with the nuclear in market.

We put three slides together that basically describe how Flowserve is positioned historically, but then also what we think our right to win is. I will not go through details, Mike. I will let you ask me questions on this. Essentially, we committed to, or we put a number out there of a $10 billion bookings prize over the next 10 years. We believe that is possible because we have strong domain expertise. We are in reactors all over the world. In fact, we have equipment in 75% of all reactors. It is a very exciting time in the industry, and we are one of the leaders within flow control for the nuclear space. With that, Mike, we will open it up.

Mike Halloran, Analyst, Baird: Why do not we just stay on the nuclear piece because it is a question we are getting a lot on. Let us just start high level and frame the entitlement to win. You referenced the 75% installed base. There is a lot of barriers for other people trying to compete to that. Maybe talk about what that looks like, and then also talk about what you play in and what the revenue opportunity can look like as refurbs and recycles come in.

Scott Rowe, CEO, Flowserve: Absolutely. We see nuclear prize in three categories. One is the traditional power and the new build of that. Second would be your SMR technology. Third is the aftermarket. In aftermarket, we have our normal aftermarket run rate. We have life extensions in there. You have kind of a resurrection of facilities that have been shut down, and now they are restarting. We include that in there as well. Back to barrier centuries and right to win. We have participated in all of the different customers around the world. I would say the 75% includes China National Nuclear Corporation, and the future of China nuclear does not include Western companies. As we think forward, we will still get aftermarket and support those existing reactors, but we will not be part of new build programs in there. With that said, there is still a massive prize.

What we put in our numbers is roughly 40 new reactors being built over the next 10 years. We believe those are with people that we have strong relationships, preferred technology. These are all the normal suspects like Westinghouse in the Americas and potentially in Europe, EDF in France, and then other parts of the world that we do really well in. We have a great position. We have product that's in there. When you're in the nuclear industry, safety and reliability are the two most important things. What these operators do not want to do is change equipment or change suppliers when they know something's working. We have been involved in the industry for almost 50-plus years. They do not want to make decisions that could jeopardize the future safety. When something works, they'll typically stick with it.

We are very confident that we will be a part of the future. We are also trying to figure out how do we make sure we can grow our entitlement. Within nuclear, there are two things. There is the nuclear island and then the power island. We do participate in both. We believe in the power island, we can bring more of our products in where maybe that kind of barrier to entry is slightly lower, but they know us well across that portfolio. We believe we can actually grow our entitlement as we go forward there.

Mike Halloran, Analyst, Baird: Large installed base, and on the slides, you kind of laid out the revenue opportunity over $100,000 for, call it a new Westinghouse type thing.

Scott Rowe, CEO, Flowserve: $100 million for a reactor.

Mike Halloran, Analyst, Baird: 100,000.

Scott Rowe, CEO, Flowserve: Per reactor.

Mike Halloran, Analyst, Baird: Yeah. Different scales, right? Different scales. Over $100 million for that type of reactor, but there's still an opportunity if SMRs take off.

Scott Rowe, CEO, Flowserve: Yep.

Mike Halloran, Analyst, Baird: How do you decide where and how you want to approach that market? Maybe there is a clear winner or not in your mind, but it seems like you have got exposure to a chunk of people and giving yourself optionality depending on how it plays out.

Scott Rowe, CEO, Flowserve: Yeah. SMR is a very dynamic landscape. There are more than 30-plus players around the world that are doing something around this technology. We have gone through a comprehensive kind of filter to get to roughly 10 that we believe will be successful as we go forward. We put a few names on our slide there, but we are working with about 10 people. When we say working with them, it is really helping them think through the technology and what is needed for the concept or their design. We think of there is a sodium concept. There is a molten salt concept. Ensuring that we have got a pump and a valve that can support the temperature in the medium that they are looking at to put in their process. These are all things that we have done before. We have done sodium within our pumps and valves.

We're in concentrated solar power, which is a molten salt application. We're in a really, really good position to be able to support that. In addition, we've got the certifications with the N-STAMP in the Americas. We've got the European Commission and the certifications there. We've got certifications in Korea and other countries. We've got the ability to participate. For us, it's really been very focused on the few players that we believe will be here for the long run. We believe we're working with the right ones. We're confident that as the industry moves forward, Flowserve will be a part of the SMRs.

Mike Halloran, Analyst, Baird: Last one here. How do you think about what that curve can look like and what your visibility is into essentially these nuclear reactors either being built or refurbed or?

Scott Rowe, CEO, Flowserve: Yeah. There's a lot of public data out there. I'd suggest folks to look at the public data. We didn't give a timeline. We put $10 billion out there, which is our bookings number. I'd say this year, we'll book over $400 million of bookings within the nuclear space. We believe it only goes up, but it will be lumpy, right? These are big projects, and there's a lot of timing. Obviously, there's government approvals in the U.S. There's state approvals. There's all kinds of other stuff on what could happen and how they finance these. It's really difficult to lock in on one scenario. Again, there's a lot of public stuff out there.

We've been using that to model the 40 and the kind of what we thought on the SMR side and what we think we said 30 in five years, translate that to at least 60 in 10 years. We feel reasonably confident on that. Things can change here. What I would say is we are fully confident that there is growth in nuclear. I do not see any scenario where this does not go forward. I think that rate or pace of growth is something that could be debated. Our $10 billion was built on what I would call a reasonable estimate that is in the fairway of what all the public data would suggest.

Mike Halloran, Analyst, Baird: I mean, you're seeing it in the orders, right? I mean, you talk about $400 million.

Scott Rowe, CEO, Flowserve: Yeah, we're at $400 million a year right now.

Mike Halloran, Analyst, Baird: Your historical revenue base was a little single-digit number. Now we're talking 10% of your order base.

Scott Rowe, CEO, Flowserve: Yeah, exactly.

Mike Halloran, Analyst, Baird: Maybe transition to a conversation about what you're seeing more broadly. What are you seeing in the marketplace from a demand perspective, particularly around willingness of customers to move forward with the mid-sized or larger projects?

Scott Rowe, CEO, Flowserve: Yeah. I'll start on projects, but I'd be remiss not to talk about our aftermarket. So I'll do that second.

Mike Halloran, Analyst, Baird: You can do both.

Scott Rowe, CEO, Flowserve: On the project side, it's been a challenging year, right? I mean, you've got in the Americas, you're dealing with tariffs. In Europe, we've got not quite recession, but not the best in markets. And we've got still the price of energy in Europe is incredibly high. You've got a lot of turmoil in the Middle East going on. I'd just say it's been a tough year for us in terms of project bookings and mid-size. It's hard for operators to think about a return on an investment when you don't know exactly what your cost position is because of a tariff or a reciprocating tariff and things like that. With that said, we've still had a very solid year in bookings. The project activity has been reasonably stable. Second quarter, we saw some healthy delays that impacted our project-type bookings.

In Q3, it was a reasonable number. I think on the forward look, I do not look, anything can happen in the world, but I think we improve from here. I feel like there is a little bit more stability. I actually think the back half of 2026 looks pretty good. In the Goldilocks scenarios, tariffs settle down, peace in the Middle East, all these things. If that happens, then there is a lot of pent-up demand that happens across many industries in terms of growth for our equipment and our services. I would say nuclear aside, which we are really bullish on, the rest of the industries we are constructive on. In the U.S., we see growth from pharmaceuticals where we are reasonably well positioned. We are seeing a lot of water projects as part of that, the infrastructure build-out. In Europe, relatively soft.

The Middle East for us is an off year. We're probably at one of our lowest booking levels for projects in the Middle East in about five years. I think just given some of the early build-out over the last two years and some of the dynamics there, that has come down. I feel like the forward look is better than it was at. As I transition to aftermarket, I think what's important for Flowserve today is less than 10% of our bookings, call it 8% or 9% of our bookings in Q3 were project bookings. We are less dependent on big projects than ever before in the history of Flowserve. A lot of our work today is on aftermarket or MRO, which would be a replacement valve or a replacement pump, or supporting smaller projects and build-outs in many applications.

We are a more cycle-resilient business than we ever have. The aftermarket business is growing at an incredible rate. We continue to do really good things. We are setting records almost every quarter in terms of what that booking profile looks like. We are confident that we can continue to expand the aftermarket through doing the right things with our capture, right? That is quoting quickly, making sure that we can get parts in front of our operators when they need them, doing repair and service in a timely manner. When you do those things, you get the work. Typically, with our customers, the OEM will always get that work. What we have found with the focus and the execution is our capture rate continues to move up.

I'd say that's a long answer to your question, but I'd say we feel reasonably constructive about the project environment, the aftermarket, and the ability to keep moving bookings forward as we transition into 2026.

Mike Halloran, Analyst, Baird: I mean, as we transition into 2026, it feels like the bookings profile suggests, plus the backlog levels, which are very solid, suggest next year shaping up to be a relatively normal dynamic, somewhat in line with your long-term growth profile. Any puts and takes towards that that we should be thinking about?

Scott Rowe, CEO, Flowserve: Yeah. I was talking about market and bookings, and maybe we'll convert that to revenue. As we think about our revenue with the project bookings in the Middle East being low and kind of the engineered pump type projects being a little bit soft, there's a little bit of downward pressure on our revenue for 2026. With that said, the rest of the business units, industrial pumps, the valves business, mechanical seals, have all seen really nice bookings growth in this year. We're confident that we can grow revenue in 2026. It's not going to be something in the double digits or something crazy that we don't typically see. It will have some downward pressure because of the large bookings kind of that delay.

With the focus and the growth that we've seen in the rest of the business, we do feel like we can continue to grow revenue in 2026. Beyond that, though, we start to see some acceleration with the bigger bookings, the nuclear and all that. Ultimately, we want to be in line with kind of that five-year target of a 5%. The way we got to that, when we put that target out, was a GDP number topped off by some strategic initiatives with our 3D growth strategy that get us to 5%. Next year, we know we've got to come out with some new targets because we've checked a lot of those, and we can kind of walk through some of that as well.

Certainly on the revenue side, we believe that with the markets that we're in, the focus on commercial excellence, how we're doing 80/20, we should be growing certainly higher than a GDP number. The team's aligned to that, and we're very much focused on how we grow the business.

Mike Halloran, Analyst, Baird: Maybe also talk about the resiliency of the model that's shifted. You mentioned it in aftermarket, but we were talking ahead of this a little bit about how the model has shifted relative to the 2010s and what you're relying on to drive growth has shifted. Maybe talk about the components of that that give you confidence in the stability of the growth, even if there is a little bit of mixed background that you have to manage.

Scott Rowe, CEO, Flowserve: For sure. Yeah. If we go back into kind of 2010, 2015, even when I started in 2017, the business was more reliant on large projects. A lot of that was because we had a heavier dependence on upstream oil and gas. Historically, about 40% of the business was oil and gas. That would be your refining, your midstream, and your upstream, and about half and half between your up and your downstream. Today, we are very much in that category. It is roughly 33% of our business. We have worked that down pretty substantially. Most of that, almost 90%, would be in the refining space. As everybody knows, there is not a whole lot of new refineries being built around the world. Most of that business is aftermarket.

Back to our capture rate and our ability to continue to drive capture rate up, we're confident in the stability and the ability to grow within refining aftermarket. I'd say there's a very different dynamic from 10 years ago within the Flowserve business. Less reliance on big projects, less reliance on large upstream oil and gas projects, really converting more to aftermarket and more diverse kind of in-markets. For the first time since I've been here, general industries is now the second category on our slide. It has moved up. We'll continue to push for that kind of more diversity within the in-markets. That whole nuclear is just an accelerant for us on growth as we think forward. I'd say we're more cycle-resilient than ever before.

This is something that we have in our outcomes of the Flowserve Business System. It is something we've worked very hard on to reposition the portfolio to make sure that we can work through any cycle.

Mike Halloran, Analyst, Baird: Yeah. It seems to me, too, that the reliability of the aftermarket or the consistency of the aftermarket should be higher.

Scott Rowe, CEO, Flowserve: Yeah, much higher.

Mike Halloran, Analyst, Baird: Because you're far removed from the large build-out cycle of 2005, 2008, 2009, however you want to frame it. That piece, you feel pretty confident on having stability in as well on top of the capture, right?

Scott Rowe, CEO, Flowserve: Yeah. Aftermarket for us is it's OPEX versus CAPEX, right? That OPEX is more tied to utilization rates, avoiding unplanned downtime. That's the focus there. We do not see a scenario where operators are not going to invest in the assets that they have. Again, we continue to do things to get more of our share and win that work. We believe that the aftermarket business is highly cycle-resilient, and we believe that we can grow it with capture rate as we go forward.

Mike Halloran, Analyst, Baird: Let's switch to margins for a little bit. We've got a handful of other things to cover. You referenced earlier, next year, we're probably going to have to manage the targets, 14%-16% is the EBIT margin target. You've said publicly that you would be disappointed if you're not at the high end or above.

Scott Rowe, CEO, Flowserve: Yeah. We're in the range right now, Mike.

Mike Halloran, Analyst, Baird: You're in the range right now.

Scott Rowe, CEO, Flowserve: We're in the range.

Mike Halloran, Analyst, Baird: Exactly. Maybe talk through a couple of things here. First, why the confidence is so high on top of being in the range already. Secondarily, where are you in the journey as far as 80/20 implementation, as far as the operational excellence curve? In other words, how much in your mind is left from a work perspective or from what you can control perspective?

Scott Rowe, CEO, Flowserve: Yeah, for sure. We just had our teams together for the last two days doing our 2026 AOP. I'd just say everybody's excited about the momentum that we've built. We're excited about what we've done with the business system. I'd just say there's a lot of confidence with our general managers on our ability to keep doing this and moving that bar up. I'll break it down in kind of the components of the business system. Operational excellence is in place. It's working. I'm super proud of what we've done. The level of consistency and focusing on the right things from a manufacturing perspective is working. A lot of our margin expansion in the last three years would be more attributed to operational excellence than anything else.

There's still room to go in there, and I'm going to come back to that because it ties to complexity reduction. Now we'll go to portfolio excellence and 80/20. 80/20 was launched two years ago. We started it at the end of 2023, beginning of 2024. That framework and methodology is segmenting your products, segmenting your customers, chopping off the SKUs that aren't making you money or too much effort to support, and then really focusing on your best customers. I gave some examples at the beginning with industrial pumps. What we've seen in year two is substantial margin improvement. We've cut off 45% of the offering. We're now redeploying resources to drive growth with our best products and our best customers, and we've seen a nice uptick in target selling.

We believe companies that really follow this methodology for multiple years continue to see margin expansion for, pick a number, five years. I mean, IDEXX would tell you it's still working today, and they're 12 years into the journey or something like that. There are a lot of companies that are way down the path, and the results are typically kind of 100-ish basis points a year for multiple years. We're in the second year, and we showed the results in our BU. We're seeing that same level in terms of margin expansion. I don't think we're close to being done with 80/20. We're starting to recut our data now for 2026. We'll now have all of our business units in their second year. We'll have one in our third year.

I'd just say we're still in the middle of this 80/20 journey, and we believe that it can continue to provide support on our margins. I'll just maybe coming back to operational excellence, when you're leaning out your facilities and then you're reducing complexity with 80/20, by definition, on both of those, you're freeing up capacity significantly. What this allows us to do is go back and think about our total footprint for manufacturing. It allows us to be a little bit more aggressive on roofline consolidation. There's still another prize in terms of continuing to move forward with what that footprint looks like, getting in lower-cost countries, but also just making sure that we've got scale within our manufacturing facilities. Flowserve was a roll-up of roll-ups.

My point is there's still a lot of opportunity to drive footprint consolidation and meet the demand and the growth that's happening there. We feel very confident in our ability to continue margin expansion, and we'll do it on the back of those two efforts.

Mike Halloran, Analyst, Baird: The buy-in internally at this point, and essentially when you think about the implementation piece, are you seeing what you want to see from your employee base as they're trying to drive and have these conversations? The second piece is more on the product side. You referenced the 45% reduction in SKUs at the industrial within some of your industrial pumps. Are we at the point where we're through some of the SKU rationalization conversation, or is there more to do there?

Scott Rowe, CEO, Flowserve: Yeah. Every year you recut your data. Every year there'll be an opportunity. Maybe I'll pick that back up, but let's go to the people and the culture because it's really, really important. Our first pillar is people excellence. It's about how do we leverage our talent? How do we do the right things? How do we create a culture that makes sense? Our culture is we have a lot of engineers. We like to solve problems. The 80/20 program is perfect for that because it is data-driven. The decisions are relatively easy. There's a lot of debate and things like that. Once you see the data, that adoption has been amazing. We started in pumps. You saw an earlier pickup on pumps. Valves is now fully in it.

You saw some nice progress in Q3 with the valve margins moving forward. I would expect that to continue. We are all in on the methodology. From a change management perspective, it is embedded and working. I just do not see a scenario where we go backwards. Maybe I will throw in we did an acquisition called Mogus about almost exactly a year ago. I was able to be at their site as I was going through multiple sites during the week, but we had done three legacy Flowserve sites, and then we went to the Mogus site. The way they did their presentation, the way the shop floor is organized, the way we have our data on inventory management and how we run the business was exactly the same. The adoption is really, really strong.

I'm excited about how we're running it and what the Flowserve business system can do for us.

Mike Halloran, Analyst, Baird: Switching gears to capital and capital deployment. I know Amy's particularly excited about the free cash flow piece.

Scott Rowe, CEO, Flowserve: We're excited that we're at a place that we can really deploy capital now.

Mike Halloran, Analyst, Baird: I know both of you think that the free cash flow as a percentage of net income or however you want to measure it has a healthy path going forward still.

Scott Rowe, CEO, Flowserve: We can still move forward on that.

Mike Halloran, Analyst, Baird: The Chart acquisition did not go through. You have been very public about the idea that you are not chasing anything large. Also took some time to rebuild the conversations with Chart falling through. Where do we stand on that side? What does the activity level look like? Are there any interesting things behind it? How do you balance that against the buyback aspirations that you have done more recently, as well as the opportunities that they are moving forward?

Scott Rowe, CEO, Flowserve: That's a long question, Mike.

Mike Halloran, Analyst, Baird: You know what? We've got three minutes. I'm trying to give you a lot of time.

Scott Rowe, CEO, Flowserve: I'll work through sequentially here. The proxies out between Baker Hughes and Chart. This is all public information. That deal came to us. It was a merger of equals. We saw a very strategic opportunity to do something that you do not get a chance to do. It was not something we were out and looking for. It came to us. We evaluated it thoughtfully with the board. It did check our capital allocation kind of framework in terms of fit with strategy, preservation of the balance sheet, and making sure that we could really do the right things with the business. It was not going to be easy. It was big. It was a little bit messy. We acknowledge all that. At the end of the day, there was something there that we were confident that we could create a lot of value.

With that said, Baker Hughes came in. They did a cash offer. The deal went somewhere else. We got $266 million as a breakup fee. What that allowed us to do is really rethink what's important to Flowserve and how do we focus on our business. We saw a stock price that we believed was undervalued at the time. We deployed roughly $200 million back into share repurchase since the termination. Q3 and a little bit into Q4 is roughly $200 million. Additionally, on capital allocation, we've had this asbestos liability for a long time. We announced this in the quarter, but we paid essentially $200 million to dispose of that liability. Now we're free and clear of asbestos. That frees up some expenses and incremental EPS as we don't have to pay a bunch of legal bills. That's exciting.

With all of that said, we still have an incredibly healthy balance sheet, right? We're less than one times leverage. We've got a healthy dividend. We have to think through what's next for us. I think the demonstration post-Chart is that we'll be flexible and we'll put money to what we believe is the highest return. We'll continue to do that as we go forward. With that said, we play in a highly fragmented space. There are lots of pumps and valve companies that are out there. There are some that have technology that we don't have. There are areas that we'd like to get more of a presence in, like nuclear and some of the other attractive end markets. We'll continue to kind of lean in on what we call programmatic M&A. With the Chart deal, our funnel, we turned everything off.

Now we're kind of repopulating what that potential M&A funnel would be. We just feel like where the balance sheet is, our ability to generate cash, this is a good use of cash. We're going to be measured. We're going to do the things that we believe will be the highest return. Again, we demonstrated that by buying shares in Q3 versus doing something else. I just say we're excited about where Flowserve is. The business system and the operating model is working. We continue to believe that there's margin expansion. We continue to believe that we can integrate a company using the Flowserve business system as we go forward. We're in a great position with the balance sheet to do some creative things.

Mike Halloran, Analyst, Baird: Awesome. Scott, really appreciate your time. Thank you.

Scott Rowe, CEO, Flowserve: Yeah. Thank you, guys.

Mike Halloran, Analyst, Baird: Management will be available upstairs in the Chestnut Room for a breakout session. I got through most of the questions. I know there were one or two I did not quite get to from the audience. That is a great opportunity to go ask management about it. Thanks.

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