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Flowserve Corp  (NYSE:FLS)
Q3 2018 Earnings Conference Call
Nov. 08, 2018, 11:00 a.m. ET

Contents:

  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:

Operator

Welcome to the Flowserve 2018 Third Quarter Earnings Call. My name is Paulette and I will be your operator for today's call. At this time, all participants are in a listen-only mode. Later we will conduct a question-and-answer session. (Operator Instructions) Please note that this conference is being recorded.I will now turn the call over to Jay Roueche, Vice President of Investor Relations and Treasurer. You may begin.

Jay Roueche -- Vice President of Investor Relations and Treasurer

Thank you, Paulette, and good morning, everyone. We appreciate you participating in our call today to discuss Flowserve's third quarter 2018 financial results. Joining me this morning are Scott Rowe, Flowserve's President and Chief Executive Officer; and Lee Eckert, Senior Vice President and Chief Financial Officer.

Following our prepared comments, we will open the call for your questions. As a reminder, this event is being webcast and an audio replay will be available. Please note that our earnings materials do and this call will include non-GAAP measures, a reconciliation of our adjusted metrics to our reported results prepared in accordance with Generally Accepted Accounting Principles is available in both our press release and earnings presentation.

Finally, this call and our associated earnings materials contain forward-looking statements. These statements are based upon forecasts, expectations and other information available to management as of November 8th, 2018, and they involve risks and uncertainties, many of which are beyond the company's control. And except to the extent required by applicable law, Flowserve undertakes no obligation and disclaims any duty to update any of these forward-looking statements. We encourage you to fully review our Safe Harbor disclosures contained in yesterday's earnings materials, which are all available on our website at flowserve.com in the Investor Relations section.

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

Scott Rowe -- President and Chief Executive Officer

Great. Thanks, Jay, and good morning to everyone. Thank you for joining today's third quarter 2018 earnings call. Flowserve delivered solid operational and financial results in the quarter with strong bookings, revenue growth and continued margin expansion. At a high level, I am pleased with the progress we've made to improve our visibility in oversight across our operations. This was the second consecutive quarter that each of our segments delivered on their targets and avoided the type of unforeseen issues that negatively impacted earnings in the past.

Our confidence in our ability to set expectations drive results and deliver value for our customers and shareholders has continued to grow with our progress. We believe we are building momentum heading into next year as highlighted by our ability to deliver two consecutive solid quarters. As a result, we increased our full-year 2018 adjusted EPS guidance range to $1.65 to $1.75. We will go into this in more detail later in the call. We are encouraged by our progress, but recognize that we still have a lot of work in front of us. We are still in the early months of our multiyear Flowserve 2.0 initiative to transform our operating model and we are now moving full speed ahead with our efforts to build a performance and accountability driven culture that will drive the enhanced value that we believe is inherent within Flowserve.

Let me briefly touch on some of the highlights of the quarter before going into greater detail. Our adjusted EPS of $0.49 was up 20% sequentially and 30% year-over-year. Revenues grew almost 8% compared to the 2017 third quarter, with improvement in both adjusted gross and operating margins. Bookings growth across all segments drove our overall book-to-bill ratio to 1.06 for the quarter, highlighted by strong original equipment and aftermarket bookings. Our end markets continue to strengthen and we now fully expect to capitalize on the opportunities that are in front of us.

Turning now to the detail on bookings. For the first time since the third quarter of 2015, we produced bookings over $1 billion in consecutive quarters. Overall, we delivered broad-based bookings growth in all industries we serve with the exception of the power sector. Bookings grew 13.2% year-over-year, which includes a 2% headwind from currency and divestitures. Our bookings were primarily from smaller original equipment awards of less than $5 million and our focus on the aftermarket. Additionally, we were awarded some larger original equipment work in the refinery space that was driven by the change in regulation for refined shipping fuels. After three years of constrained maintenance spend, we have seen increased MRO spending over the last three quarters as our customers look to properly maintain their facilities. Our third quarter aftermarket bookings of $507 million represents the highest level, since 2014, and was up nearly 12% year-over-year. An important aspect of our transformational efforts is to further capitalize on our significant installed base and our vast network of Quick Response Centers.

While we continue to see large projects move toward FID, Flowserve is a late cycle beneficiary of larger project work. We remain encouraged by the increased visibility we have into those opportunities, and believe that many of these will come into fruition in 2019 and 2020. Over the last several months, our confidence has increased regarding what is in the pipeline and when we likely to see increased project bookings. While forecasting any one quarter of bookings is always a challenge, we are optimistic, our approved end markets, active quoting funnel and solid capture rate will continue to support increased bookings for the fourth quarter, generating a healthy backlog going into 2019.

Looking now at the third quarter bookings by end-markets and starting with our largest market, oil and gas. Bookings increased 27% year-over-year, driven by EPD's 34% increase. We continue to expect increased investment by our customers based on their pre-FEED and FEED activities and projects progressing toward FID. Flowserve has also had success with and provides unique offering of highly engineered products that are well suited to enhance the processes critical to cleaner fuels. We anticipate that many of our downstream customers will pursue this type of investment, due to the ongoing regulatory changes, such as IMO 2020.

FCD's oil and gas booking contributed nearly 20% growth, including several small, mid and downstream awards, while IPD's oil and gas bookings were roughly flat. In chemicals, our bookings increased approximately 4%, with all segments delivered growth. IPD led the group with the 12% year-over-year improvement, EPD contributed 4% growth, while FCD's bookings grew 1%. While FCD and IPD orders benefit from participating in a North American chemical project, where we expect to see continued investment both near and long term. Our project pipeline includes significant expected ethylene investment in Asia, the Middle East and North America, as these projects progress toward FID.

Flowserve's power bookings decreased 27% year-over-year and remains our most challenged market. Each of our segments, power bookings this quarter declined year-over-year by about the same percentage. We continue to have muted expectations in the power markets near-term. There are a few fossil fuels and nuclear opportunities in Asia, but Western nuclear and traditional power generation markets remain challenged and competitive. General industry bookings increased 3%, driven by strong distribution activity. FCD's bookings grew over 24%, it was partially offset by EPD's 18% decline, while IPD contributed roughly 3% growth. The efforts in the distribution channel delivered strength from all regions, with the exception of the Middle East.

Mining, food and beverage, and pulp and paper were all up over 5% on solid broad-based market activity, but these markets only represent about 5% of our business. Lastly, the water industry, which represents the smallest category we breakout on a stand-alone basis was up 67% year-over-year and represented about 6% of our total bookings. While this is a small market for Flowserve, the growth rate is encouraging. Geographically, Europe and Asia Pacific grew 27% and 26% respectively, and Latin America continues to improve up 14%, its third consecutive quarter of growth. North America was up 3%, while the Middle East and Africa declined 6% versus its highest quarter of bookings in 2017.

Turning now to our performance by segment. IPD's performance continued to improve in the third quarter, delivering a 320 basis point improvement in adjusted operating margin, leveraging a modest 5% revenue increased. While IPD is making progress, margin improvement again was restrained by the shipment of low margin past to backlog that we are continuing to clear. We also completed the previously announced divestiture of two non-core and low margin product lines early in the third quarter, which negatively impacted IPD's revenue by about 5%. We expect another meaningful step in the fourth quarter in our efforts to deliver our target of mid to upper single-digit operating margins. While progress in IPD's turnaround has been slower than we would like, the structural and sustainable improvements we are pursuing are critical to achieving its full potential and mid-teens margin business over the longer-term.

EPD delivered 10% revenue growth in the quarter compared to the prior year on strong original equipment and aftermarket shipments, that included a 2% sales mix shift toward lower margin original equipment shipments. Continued improvement in EPD's manufacturing process drove an adjusted gross margin increase of 10 basis points, despite the mix shift headwinds. FCD continued its solid operating performance, driving significant incremental margin improvement on 6.4% sales growth. Adjusted gross and operating margins increased 210 basis points and 290 basis points respectively year-over-year. FCD's 18.6% operating margin included increased fixed cost absorption, positive product mix shift and continued strong cost control.

From an overall market perspective, we are optimistic that our improved visibility to the growing project pipeline provides meaningful late cycle growth opportunities to complement our foundational run rate in aftermarket business. As we pursue this growth, we intend to continue our focus on better execution, which will result in improved product costs and lower overhead costs. Our transformation actions and operating improvement initiatives position Flowserve to better capitalize on the market recovery, while delivering value for our customers and shareholders.

I'll now turn it over to Lee to discuss our financial results in greater detail. And then I'll return for a few closing comments before we open the call to Q&A. Lee?

Lee Eckert -- Chief Financial Officer

Thank you, Scott, and good morning, everyone. For the third quarter, we delivered adjusted earnings per share of $0.49, modestly above our expectations coming into the quarter. On a reported EPS basis, we earned $0.21 per share, which includes adjusted items comprised of $0.20 of realignment and transformation expenses, $0.04 of charges related to previously announced divestitures and $0.03 below the line FX expense.

Third quarter sales of $953 million, increased 7.8% versus prior year, which included a modest benefit from the new accounting standard that was largely offset by the approximate 2% headwind from currency and divested assets. We do believe the new revenue accounting standard and the associated increase in our POC accounting has helped to mitigate some of our traditional earning seasonality. Breaking down our revenue by mix, original equipment sales increased 11.8% as compared to the 2017 third quarter, while aftermarket sales increased 3.9% to $457 million, representing 48% of our total revenue for the quarter.

Looking now at gross margins, at 33.2%, our adjusted gross margin was up 130 basis points versus the prior year's third quarter and reached the highest level we've seen in nearly two years. Volume leverage, better execution, as well as our cost initiatives are key drivers behind this improvement. We're also confident that the quality of our backlog has increased during the year. We know however that there are more opportunities ahead on these fronts. Continued tight cost control and improved sales leverage drove a 30 basis point decrease in adjusted SG&A as a percentage of sales to 22.6%, more than offsetting compensation headwinds. On a reported basis, SG&A is elevated due to the quarter's transformation expense, which we expect to see decline in future periods.

Third quarter adjusted operating margin increased 160 basis points to 11% driven by strong 320 basis point and 290 basis point improvements in IPD and FCD respectively, which were partially offset by EPD's 40 basis point decline and a 2% sales mix shift toward lower margin OE versus prior year. On a reported basis, operating margin decreased 200 basis points, primarily related to transformation costs at corporate. Our reported effective tax rate of 33.6% was elevated in the third quarter, primarily due to losses in foreign operations for which there was no tax benefit. On an adjusted basis, the effective tax rate for the quarter was 28.8%, again, modestly above our full year adjusted guidance range.

Turning to cash. Operating cash flow for the quarter were $83 million, representing a substantial increase of $57 million compared to the 2017 third quarter driven by an improvement in working capital. This marks the second consecutive quarter with meaningful year-over-year improvement. Our free cash flow in the quarter was $65 million, or $0.49 per share and was up over $50 million from the prior year. This total amount represents the conversion rate of over 100% of our adjusted net income. At September 30th, we also continue to maintain a strong cash balance at over $0.5 billion.

Capital expenditures in the quarter were $80 million, up about $7 million from a year ago. The increase was primarily related to enabling technology investments as part of our Flowserve 2.0, as well as some increased spending on ongoing restructuring initiatives. We also returned $25 million during the quarter to shareholders through dividends. We are pleased with the quarter's total working capital improvement of approximately $50 million over the last year, especially considering our 2018 revenue growth. We know much work remains ahead to achieve consistent level of cash flow conversion that we believe Flowserve can ultimately deliver. While the company has understood the need for working capital improvement for several years now, Flowserve 2.0 will serve as a catalyst to impact lasting change. We are investing in systems and process tools directed all aspects of our order to cash and sales and operating planning processes. Obtaining a sustainable fix won't be quick or easy, but it's an effort we're pursuing given the substantial opportunity available. I look forward to sharing additional detail on our efforts with you at our upcoming Analyst Day.

Turning to our outlook. For the remainder of 2018, our solid results and the momentum gain over the last two quarters positions Flowserve well, as we look ahead. Accordingly, we now expect 2018 full year adjusted EPS in the range of $1.65 per share to $1.75 per share and revenue growth of 5% to 7%, including our roughly 1% FX tailwind, largely offset by approximately 1% negative impact due to divestitures. Due to the new accounting rules, we don't expect to see the traditional seasonality in the fourth quarter like as in years past. As our guidance applies however, we do expect to end the year with another solid quarter.

From a 2018 cash usage perspective, we expect to return approximately $100 million through dividends to our shareholders. Capital expenditures are now expected in the $70 million to $80 million range. Although our expected 2018 CapEx guidance is down slightly, we do continue to invest in technology to support Flowserve 2.0, as we saw this quarter, as well as improving our manufacturing productivity. We also expect full-year debt repayment of approximately $60 million and to contribute approximately $30 million to our global pension plans, mainly to cover our ongoing service cost as US plants remain largely fully funded.

Let me now turn it back to Scott for his closing remarks.

Scott Rowe -- President and Chief Executive Officer

Great. Thank you, Lee. As we wrap up, I'd like to spend a few minutes updating you on the progress of our transformational efforts. Shortly after I joined Flowserve, I laid out the case for organizational, operating and cultural improvements that were necessary to simplify and increase the effectiveness of our business model. Under the Flowserve 2.0 transformation program, we now have major initiatives under way to drive value and improve across six key work streams; operations, commercial, growth, aftermarket, cost structure and working capital.

We have a designated and full-time team leading this effort and we've brought in external advisors to help us build our capability and it fits with skill set gaps and world-class thinking. The team has built our value capture plan and its running the program with the tools that you would expect from an initiative with this scale. While we are beginning to see some initial financial benefits impacting our results, we are still in the early stages of the transformational program. We are confident that Flowserve's performance will improve in 2019 and beyond and that our efforts will result in significant financial improvement in the coming years. I'm very pleased with the current transformation progress, the engagement and commitment of our associates and our focus on taking the proper actions to drive value.

In addition to the performance aspect of the transformation, we are also highly focused on the health of the Flowserve enterprise and the engagement of our associates. I truly believe that an informed, engaged, empowered workforce is critical to driving the systemic change that we are seeking for Flowserve. When I joined, our associate engagement levels were not where they needed to be to undertake this type of transformational change. We have seen a marked improvement in this metric and our employees are committed to the change we are pursuing together. The transformation is serving as the catalyst to fundamentally change the way we think, act and operate at Flowserve. We are clearly gaining traction and momentum, but is important to remember that we are still early on this journey. I'm truly optimistic on what Flowserve can become in the value we can deliver to our customers, our associates and our shareholders. Flowserve will be hosting an Analyst Event on December 13th in New York City. We will provide additional details on the event later this month. We certainly hope to see many of you there as we share additional details on the Flowserve 2.0, and our expectation for value creation going forward.

Operator, we have now concluded our prepared comments. We now like to open the call to any questions.

Questions and Answers:

Operator

Thank you. We will now begin the question-and-answer session. (Operator Instructions) And our first question comes from Charley Brady from SunTrust Robinson. Please go ahead.

Charley Brady -- SunTrust Robinson -- Analyst

Hey, thanks. Good morning guys.

Scott Rowe -- President and Chief Executive Officer

Hey, good morning, Charley.

Charley Brady -- SunTrust Robinson -- Analyst

Hey, I just -- I guess on the -- the commentary on the working capital, it's systems you're putting them in place. Can you get a little more granular on kind of what you guys are doing specifically to drive that working capital improvement you're expecting over the next, a year or two, I guess?

Scott Rowe -- President and Chief Executive Officer

Sure. Let me start, and then I'll let Lee go into some of the specifics, but -- I've talked about this before working capital clearly isn't where we want it to be and we knew, we've got to do a lot of things to fix it. Unfortunately with the decentralization at Flowserve when we started, it's been more difficult than I expected to drive the systemic processes and the systems that ultimately get us to where we want to be. We put this within the Flowserve 2.0, and what I'd say is, in the last kind of year, it's been a lot of -- a lot more around visibility and brute force and we're getting some improvement around that. And now we're really switching into a much of a more of a process focus in the system enhancement. So Lee, do you want to add anything?

Lee Eckert -- Chief Financial Officer

Yeah, I'll just speak a little bit more about it. And we are pleased with the improvement in DSO year-over-year and sequentially. But we know we have a significant amount of work to do. I would say a lot of our progress to date has been manual and with a lot of intensity. For example, I do a weekly cash call. We've given cash target to our business and then we track, how much cash we should collect every week through the quarter, but very, very manual and very intense. Going forward with 2.0, our aspiration is to have more systematic fixed. So it's not take as much time for management.

Scott Rowe -- President and Chief Executive Officer

Yeah. And then on the inventory side, which is probably the biggest prize. We've made progress and we're doing reasonably well, and as revenues go up, we've been able to hold our inventory levels, but there's still a lot more work to be done here. We've got an organization now in place that's focused on planning and materials management. And now we're moving to the process and system side to really start to drive that in a better fashion than we had in the past.

Charley Brady -- SunTrust Robinson -- Analyst

Thanks. And just one more from me. On the refined fuels, regulations that are coming into play. It sounds like you guys are seeing some decent pickup in work on that. I'm just wondering, if you can maybe expand on the level of activity that you guys specifically are seeing. And do you expect any of that to carry, how much -- how far they're into 2020, or is it more a 2019, just give me the timing of when this stuff has to get shipped and then installed?

Scott Rowe -- President and Chief Executive Officer

Sure. So we've got a really nice product mix on the pump side for taking the refined fuels and making them a little bit cleaner than they are today. And so it is a sweet spot for us. We got some bookings last quarter, and then we saw a pretty significant uplift this quarter, in that level of bookings. And we expect that to continue for the next, at least two quarters, maybe even three. So we feel pretty good about this area and what we're trying to do is, use some of the technology that is preferred and then start to bundle that with some of our valves and other pumps as they're building out and expanding their existing refineries. So this is a good space for us and we benefited in the quarter, and we very much expect to see future work here in 2019.

Charley Brady -- SunTrust Robinson -- Analyst

Great. Thanks. I appreciate it.

Operator

Our next question comes from Andy Kaplowitz from Citi. Please go ahead.

Andrew Kaplowitz -- Citi -- Analyst

Hi, good morning, guys.

Scott Rowe -- President and Chief Executive Officer

Hi, Andy.

Lee Eckert -- Chief Financial Officer

Yeah, good morning.

Andrew Kaplowitz -- Citi -- Analyst

Scott, OE bookings up 15% year-over-year is the best you've seen in this cycle. You already mentioned IMO 2020 bookings. But can you talk about the conversations you're having with your customers. There is obviously a lot of cost cuts out there may be more difficult US, Saudi relationship, that's going cash pension, but it seems like you're still seeing improving activities. So would you generally characterize your customers as constructive here with getting projects over the finish line. And you did say last quarter the projects that could get FID, but in the year have you seen these projects begin to move forward?

Scott Rowe -- President and Chief Executive Officer

Yeah. I think constructive is probably the best word to use. As you know, and you said it, there is a lot of challenges, there's a lot of headwinds out there. There's political issues, there's geopolitics and other cost issues. But I think overall, I think the environment is reasonably good for moving forward the big projects. And so, while I think everyone is -- has an air of caution, I think, the commodity markets in the political environment is stable enough to where folks are willing to step forward and commit things into FID and move forward. And so all the discussions I've had points to a 2019, that should be pretty solid in terms of projects, and we should see another nice growth from 2018 into 2019.

Andrew Kaplowitz -- Citi -- Analyst

Okay. That's helpful. And just on the topic of 2019, I know, you don't want to go into too much color at this point, but could you give us some of the puts and takes, when we look at your margin and specifically focused on your adjusted incremental margin, if we assume the basin 2018, and looks like it's something in the mid 20% range. When you look at 2019, I think you've already said that you expect to see better absorption and incremental, even if how we mix increases of debt given thoughts to play now. So, if I think about that, if I think about price versus cost, again, I don't want to put words in your mouth, but maybe a net modest positive even though there will be tariff release (ph) and then incentive comp. I think it's higher in 2018, right. So maybe it's flattish in 2019. So, is there anything I'm missing there. As I think about the puts and takes, and so would incrementals rise, then in 2019 versus 2018?

Scott Rowe -- President and Chief Executive Officer

Yeah. So, I'll just start with, we're not ready to give guidance yet for 2019, but we will be doing that. And now, we're currently in our budgeting process. But I mean, you've hit all the big things that we asked in there are challenging our platforms to deliver. The only thing I would say is, in addition to that, we've got the transformation program across these work streams that in theory and as we've seen to start to work should be driving outsized benefit then just what we see from the macro picture. And so my expectation is that we move forward in each of the categories, and that 2019 is a pretty good year for us. But what I'd say is, we'll do the Investor Event in December and will outline the bigger picture. We probably won't go into 2019 details during that session, but then quickly in the New Year will provide guidance for 2019.

Andrew Kaplowitz -- Citi -- Analyst

Okay. And just one quick follow-up on this year's guidance. You mentioned last quarter that your aspirations for performance were higher than your guidance. Is you new clients closer to aspirations at this point, or your aspiration is still higher?

Scott Rowe -- President and Chief Executive Officer

Yeah. I would say, we're definitely closer. There were some things in the quarter, that I wasn't pleased with. And I'd say, it's more around the past-due backlog and the working capital. But I think on the revenue and the cost side, we are progressing as I would have liked, and kind of toward our internal targets there. I think probably the biggest thing in the quarter for us is, my first few quarters here, we would have a pretty major surprise each and every quarter. And for the last few quarters, we've eliminated and not have those big negative surprises. So that is definitely a positive step. I think we're starting to perform like I would like and expect, but we've got a lot of work to go, and it's a journey for us.

Andrew Kaplowitz -- Citi -- Analyst

Thanks guys. Appreciate it.

Operator

Our next question comes from Scott Graham from BMO Capital Markets. Please go ahead.

Scott Graham -- BMO Capital Markets -- Analyst

Hey, good morning. Nice quarter you guys.

Scott Rowe -- President and Chief Executive Officer

Yeah. Thanks, Scott.

Scott Graham -- BMO Capital Markets -- Analyst

So, I was hoping you could give us a little bit more on past-due backlog is by segment, particularly what you saw in the September bond?

Scott Rowe -- President and Chief Executive Officer

I'm sorry, in this September month or in the quarter?

Scott Graham -- BMO Capital Markets -- Analyst

Yes. Well, in the quarter, but --

Scott Rowe -- President and Chief Executive Officer

Yeah.

Scott Graham -- BMO Capital Markets -- Analyst

Speaking with the gents last night, it seems as if -- maybe I mistook this, but it sounds as if like there are some things that maybe went in the wrong direction in September into --

Scott Rowe -- President and Chief Executive Officer

Yeah. Let me just talk about the quarter and you'll get a general idea here. I just said this, I'm not as pleased as I here, would like to be on our progress on past-due backlog and there are a lot of reasons for that. But I'll just started again, we didn't have a major negative surprise or a significant event that changed our thinking and our progress there. And I will say, we are making progress on past-due backlog, but it is not as meaningful or step changes as I would have liked. And so basically, if you look at kind of what's going on is, we had some large more challenging orders that we took at the end of last year, and the beginning of this year and for whatever reason they've been constrained in our system and we're working through that. The previous issues that we talked about due to realignment are for the most part behind us and now we've kind of fixed some of those problems and we're addressing some of the bigger projects that didn't come out.

And then when we look by a platform basis, IPD did (ph) progress, which was a very good sign and we're happy to see that. EPD and the Valve business did not progress and actually went backwards just a little bit. And so when we look at it in the quarter July and August, we were making progress. We did take a step backwards in September. And then what I would say is, I've gotten the preliminary numbers for October, and we've already cleared a lot of the stuff that we saw -- that got stuck there at the end of September for us. But look, this is one that we've got a fix, and it's -- unfortunately, it's not a quick fix, because it really goes down to planning and materials management. And it's just not been a focus, or a competency at Flowserve. And so we stood up this new manufacturing department. We did that in February with designated resources and recreated the Central Planning Office here in the headquarters building and there we've hired a new VP of Operations that started in July.

And so what we've now done; we got the people in the organization in place, we put a very structured process and we're really moving toward a robust sales and operational planning process that will launch in 2019, and then we're going to really get focused on the production planning and materials management side. And so, I'm very confident that we are making progress, it's not at the pace that I want to, and I do think by 2019, this will not be an issue for Flowserve.

Scott Graham -- BMO Capital Markets -- Analyst

Got it. Thank you. My follow-up would be around really the fourth quarter implied sales guidance which is, I guess, maybe a little bit confusing because on a full-year basis of 5% to 7% revenue growth, my math says plus 4 to minus 4, and I know that there's FX going the other way, this divestiture going the other way. But could you kind of give us a little bit more color on that range which not only is wide, but also has half of it is on the negative side of the ledger?

Scott Rowe -- President and Chief Executive Officer

Yeah. So we will let Lee do -- I think he has got a bridge here that can clarify.

Lee Eckert -- Chief Financial Officer

Yeah. So our implied fourth quarter guidance is roughly flat on a reported basis, reflecting the smoothing of our historical fourth quarter seasonality due to revenue recognition. So that's the big thing you need to remember is in -- 2017 fourth quarter increased 17% versus third quarter, and we're not expecting that type of transition. So the other thing I would highlight is our organic growth is roughly around 3% in the fourth quarter, when you include roughly 2% currency headwind and 1% of divested businesses. So right now, the big change I think this quarter versus prior quarter is, the accounting as basically smooth our revenue during the year. So as I mentioned earlier, what we think is based on our guidance is that revenue will be roughly flat versus last year.

Scott Graham -- BMO Capital Markets -- Analyst

That's really helpful, Lee. Thank you. I can just sneak one more in here. You were talking about earlier that you see a good, reasonably good operating environment. I was just wondering, if you could kind of bring that same sort of thinking in common to bear on the emerging markets which is a good chunk of your business, and if you could just give us an idea as the quarter progressed, how bookings in the emerging markets went for you? Thanks.

Lee Eckert -- Chief Financial Officer

You're talking about Q3, Scott?

Scott Graham -- BMO Capital Markets -- Analyst

Yes, yes.

Lee Eckert -- Chief Financial Officer

We had healthy bookings yield primarily in Asia, and we're seeing a lot of activity, both in Asia and the Middle East. And so I'd say, as we go forward those are the two areas that probably had the biggest growth on the project side, and it's something that we're very focused on, and we've got good teams there. And so in Q3, we got pretty much what we wanted in terms of the opportunities on projects there, and then from an aftermarket standpoint we're doing really well in the emerging markets and we expect to continue to do that with our large presence with QRCs and focus in country.

Scott Graham -- BMO Capital Markets -- Analyst

Great. Thanks a lot.

Operator

Our next question comes from Josh Pokrzywinski from Morgan Stanley. Please go ahead.

Josh Pokrzywinski -- Morgan Stanley -- Analyst

Hi, good morning, guys.

Scott Rowe -- President and Chief Executive Officer

Hi, Josh.

Josh Pokrzywinski -- Morgan Stanley -- Analyst

Just wanted to jump in on some of the mix within EPD. I guess given how bookings have generally trended soured (ph), Scott, I think in some of your prepared comments talked about aftermarket being solid and coming in well. I would think, given the pretty widespread there between the OE side of the business in the aftermarket, particularly seal, that we'd start to see a bit more of a pickup there on margins. Is that something you expect to start happening going forward? Can you just give us any context for mix both in the quarter and kind of looking out over the next several?

Scott Rowe -- President and Chief Executive Officer

Sure. Yeah, so the EPD margin in the quarter actually -- we were relatively pleased with where we ended up. And so when you look at the year, we've been moving margins up quarter-over-quarter through the year. When you look at it against last year, we are down slightly. But I think there was an aftermarket mix there. And then in addition to that, we had some increased SG&A in that platform, and a lot of that was around incentive comp, and then also higher R&D. And so I'd say in the engineered side, it's an area that we've underinvested in our product portfolio and it's a place that we actually really need to spend more money and make sure that we've got the right products for the right solutions and really have a refreshed product out there as we're competing against some of our more hungry peer group. And then the other thing I just want to remind you, if you remember last year in the fourth quarter EPD's margins dropped substantially. And so what we're really focused on and trying to do is make sure that we're avoiding that step backwards. And at this point, I think fourth quarter will be similar to the trajectory as what we saw margins in Q3.

Josh Pokrzywinski -- Morgan Stanley -- Analyst

Got it. That's helpful. And then just shifting over to FCD, kind of the other side of the equation. Clearly, very strong quarter, and these have popped up from time-to-time where it just surprises everybody to the upside. I mean, what's your sense for the cadence there? Is that smooth out and some of that revenue recognition related that would cause that's smoothing? Just trying to get a sense for any visibility you have there and what that could look like, especially with the tough comps?

Scott Rowe -- President and Chief Executive Officer

Yeah. So, let's start -- well, I will just say, FCD had a great quarter, and that team is highly focused, they're doing everything that we expect. They are ahead on the price curve side, we've got price increases that really took hold earlier in the year, and then the facilities for the most part are operating at a pretty high level. And so they're just doing solid fundamentals in running the business, how we would expect and want them to run that. I would say, third quarter was a high margin quarter. But when you go back and look at 2014, I'm sorry, 2017 in the fourth quarter, they really had an outsized quarter there. And what I'd say is, we don't expect that big jump again in fourth quarter. But I think, if you kind of look at Q2, Q3 and say and take an average there, and say that's a run rate, then that's probably a good number to look at as we go forward.

Josh Pokrzywinski -- Morgan Stanley -- Analyst

Perfect. And then just one more. I want to make sure I'm clear on these revenue recognition comments. Was there any positive effect of that smoothing in the other three quarters as 4Q gets kind of smooth to the downside? I just want to make sure we're clear on that.

Scott Rowe -- President and Chief Executive Officer

Yeah. So you may recall, in the first quarter we've recognized roughly about $70 million (ph), so the difference between 606 and 605 about $70 million. Second quarter, it was about $10 million, and this quarter it was about $24 million. My expectation is that, that should flip in the fourth quarter about -- we'll find out.

Josh Pokrzywinski -- Morgan Stanley -- Analyst

Got it. Thanks for the clarification.

Operator

Our next question comes from Deane Dray from RBC Capital Markets. Please go ahead.

Deane Dray -- RBC Capital Markets -- Analyst

Thank you. Good morning, everyone.

Scott Rowe -- President and Chief Executive Officer

Hi, Deane.

Lee Eckert -- Chief Financial Officer

Hi, good morning, Deane.

Deane Dray -- RBC Capital Markets -- Analyst

I would like to get an update on price cost where you expect to come in for the year, or you just gave that shout out to FCD that they're ahead of the game, but broadly, what the challenges have been? I know you don't give a lot of detail on price, but just if you aggregate price cost, where that stands? And what tariff impact that you've seen so far?

Scott Rowe -- President and Chief Executive Officer

Sure. Yeah. So, obviously, it's been an incredibly dynamic environment and a lot of changes this year. And so let me start with inflation, I'll hit tariffs, but on the inflation side, we are seeing inflation on the material and on labor. And so that's an area we're very focused on, and we're trying to neutralize and protect against that. And then on the tariff side, we are being impacted, but what I'd say is, it's a relatively small number for all of Flowserve. And so, while they are out there and we watch it very carefully and we're watching it closely. At this point, the tariffs have had a minor impact to our total cost structure.

And then on the pricing side, if you remember, we did two early price increases. We did a general one at the beginning of the year, and then we did a tariff specific one, right as we ended the first quarter and ended the second quarter. And so right -- and then, the other part of that would be the engineered-to-order business. The engineered-to-order business, this is where we're building the cost up at the time of the proposal. And on that side, we can definitely make sure that we've got inflation and tariff impact price into that bid. And so right now across the board in all of our platforms, we feel that we're on the positive side of the price cost curve. And you're seeing that in our gross margins, as we've kind of been able to keep that and actually progress it each quarter this year. And so we're obviously turning the quarter now and we're looking at next year, we are concerned about inflation and we're concerned about other things that could change in the geopolitical landscape. But I don't think that changes next year in terms of being ahead of the curve. And so we're looking at where our price increases should be and will probably be pretty active in getting that out there. And ultimately we want to be a price leader here, right. So we want to be in front of it, and driving that as we go forward.

Deane Dray -- RBC Capital Markets -- Analyst

And about tariffs?

Scott Rowe -- President and Chief Executive Officer

Yeah, sorry. Tariff again, tariffs were a minimal impact for us. And so it's out there and what we've been able to do is, we've neutralized it with price, but then our supply chain has also been able to migrate your out of certain countries and in the others to where we neutralize that impact. And so again we feel we're on the positive side of any tariff impact and while it's a concern and it could change any day, and it's something that we watch incredibly closely. At this point, we feel good about our position and we're in a good place and will continue to monitor and we will adjust in 2019, if needed.

Deane Dray -- RBC Capital Markets -- Analyst

Got it. And then just as a follow-up on the end market discussion given how well you've done in oil and gas for this quarter, there were some competitors who struggled. And it just seems like you have also taken some share this quarter. Is that a fair assessment and can you give any color there, please?

Scott Rowe -- President and Chief Executive Officer

Sure. I would agree, we took share in the quarter. There are also some things that we missed in the quarter as well. But I think, oil and gas for us is done, done really well, it's primarily in the downstream side. And so most of our orders there were downstream and quite frankly were refineries. And so in that space, we've got a pretty unique product offering that does very well. And so we got our share of the awards and certainly did better than what we've been doing in the first half of this year or even last year. So that's a nice spot for us and any time we've got brownfield expansions, where we've got an installed base, we typically do pretty well.

Deane Dray -- RBC Capital Markets -- Analyst

Great. Looking forward to the meeting in December. Thanks.

Scott Rowe -- President and Chief Executive Officer

Yeah. We'll see you there. Thanks.

Operator

Our next question comes from Joe Ritchie from Goldman Sachs. Please go ahead.

Joe Ritchie -- Goldman Sachs -- Analyst

Thanks, good morning, guys.

Scott Rowe -- President and Chief Executive Officer

Hi, Joe.

Joe Ritchie -- Goldman Sachs -- Analyst

So maybe just kind of following up on that point. Obviously like big focal point here, the oil and gas orders coming back. Can you maybe just talk a little bit again around like the pricing discipline around the orders and what you're seeing in the marketplace today, any color there would be helpful?

Scott Rowe -- President and Chief Executive Officer

Yeah, sure. So, I'll say, oil and gas specifically will stay there. And again, primarily that was refinery, and refining for us in the quarter. And we've got a pretty good market, or a basket of products that fit that market really well. And so we feel good about the margins that we achieved in Q3. Now what I would also say is, when we don't have a preferred offering, or we don't have the installed base in that existing site, and it's a greenfield tender, we are still seeing really competitive prices on our engineered pumps side. And I would say it's a little bit surprising with me given the uplift in the market activity now for the past couple of quarters. And I fully expect that pricing should improve across the peer set here as we go into 2019, but it's still competitive. And then if I apply that under the valve side, the engineered valves is still an incredibly competitive space for pricing.

Joe Ritchie -- Goldman Sachs -- Analyst

That's helpful, Scott. I mean, have you found yourself walking away from some orders because of this pricing dynamics in some of the segments, sub-segments that you talked about?

Scott Rowe -- President and Chief Executive Officer

Yeah, so I touched on that a lot, after the Q1, in Q1 earnings call. And what I would say is, our team is very focused and we're not afraid to walk away from work that doesn't make sense for us. And we obviously need to look at it holistically, and we need to look at what the aftermarket brings in all that. But there are jobs, and there are orders that we walked away from this quarter because we weren't there.

Joe Ritchie -- Goldman Sachs -- Analyst

Yeah. That's helpful. If I could ask one more, just on the -- on the dynamics with revenue recognition and seasonally not seeing the same kind of step up into 4Q. Are there any impacts that you would see the cash flow as well. So I'm just trying to understand like how we should think about the cash flow number for the year specifically because 4Q tends to be a big quarter for you guys?

Scott Rowe -- President and Chief Executive Officer

Yeah. I'll let Lee jump in on that one.

Lee Eckert -- Chief Financial Officer

Yeah. So our expectation is that we'll have a really strong cash flow in the quarter. Typically what's happened is, there's obviously a lot of shipments that happen in the quarter, a lot of stuff, as Scott talked about the past as we clear up, past-due backlog. So what I suspect it's going to happen is, we're going to see a lot of shipments go out. We're going be invoicing lot of customers. I think you'll see a mix between assets going for out of contract assets into receivables and we're going to work hard to collect those receivables. But our expectation is that we're going to have a strong cash quarter. Last year was really strong. We did -- I think over $200 million of operating cash flow in the quarter. I'm not that sure for going to that high, but I suspect we're going to be pretty strong versus third quarter.

Scott Rowe -- President and Chief Executive Officer

Yeah. And then, then just to clarify, right the 606 accounting really is around revenue recognition and should not impact what we expect on cash flow in Q4.

Joe Ritchie -- Goldman Sachs -- Analyst

Okay. Thanks guys.

Operator

Our next question comes from Jeff Hammond from KeyBanc Capital Markets. Please go ahead.

Jeff Hammond -- KeyBanc Capital Markets -- Analyst

Hey, good morning, guys.

Scott Rowe -- President and Chief Executive Officer

Hey, Jeff, good morning.

Jeff Hammond -- KeyBanc Capital Markets -- Analyst

So, I think, if I had two really strong order quarters, but larger projects have been largely absent. What are you just seeing from our visibility as you move into 2019 on some of the larger projects?

Scott Rowe -- President and Chief Executive Officer

Yeah. I think, what I'd say is, we didn't get any large ones that were the Hengli and Dangote size, but we did get a handful of projects primarily in refining that were more than what we had been seeing over the last couple of quarters. And so we felt good about the projects that we got in Q3. And then as we look at 2019, our pipeline and kind of what we see out there at our customers that are either in FEED or pre-FEED activities is definitely higher than what it was at this time last year. And so we feel pretty good about the project pipeline. And again you although there is a lot of your kind of dynamics out there in the geopolitical sense and we've got oil prices coming down a little bit here in the last month. I think our customers are still willing to move forward with some larger projects, just because they haven't really done that now in the last four years. And so we see projects next year a higher level than what we had this year in 2018.

Jeff Hammond -- KeyBanc Capital Markets -- Analyst

Okay, great. And then clearly some progress on Flowserve 2.0, and seeing better trends. Just -- as you kind of see yourself shifting maybe from defense to more on offence. Just, how are you, maybe refreshing on M&A and capital allocation in terms of maybe starting to return more cash to shareholders through buybacks? Thanks.

Scott Rowe -- President and Chief Executive Officer

Yeah. That's a great question. And quite frankly, I'm not ready to make that transition to offense, and I love the analogy, but clearly right now we're focused on blocking and tackling. We're focused on execution. We're focused on generating more cash flow. And so what I'd say is, our heads are down right now and we're really trying to stabilize and improve our margins and improve our operating consistency in our operating performance. With that said, at some point we've got to switch gears here. And I don't know when that happens, and obviously having two relatively good quarters and solid performance starts to give us more confidence. But what I'd say is, we're not quite there at this point.

Jeff Hammond -- KeyBanc Capital Markets -- Analyst

Okay, great. Thanks guys. See you next month.

Scott Rowe -- President and Chief Executive Officer

Sounds good.

Operator

Our next question comes from Steven Fisher from UBS. Please go ahead.

Steven Fisher -- UBS -- Analyst

Thanks, good morning.

Scott Rowe -- President and Chief Executive Officer

Good morning.

Steven Fisher -- UBS -- Analyst

Just wanted to confirm, are you guys did on the last conference call that you were supposed to clear a pretty large past-due project from the EPD in the third quarter. Is that's the one that you said on this call cleared in October?

Scott Rowe -- President and Chief Executive Officer

Yeah. So that was the added and want to get some specifics on certain projects. But yes, we thought we are to clear in September, it didn't -- and we've got, we've now have visibility and that's gone in the month of October.

Steven Fisher -- UBS -- Analyst

Okay. And I think you also said on this call that the margins in EPD, in Q4 would be similar to Q3. I'm just wondering, if that's a lower margin project as its past-due with that naturally just depressed the margins in that segment, or is there something that you're offsetting that with, and if so, is it cost structure, or is it more just the better margins that are coming through backlog?

Scott Rowe -- President and Chief Executive Officer

Yeah. No, I think, again Q3 margins for EPD worked bad, right. If you look at the year-over-year they weren't right, but I mean, you had a mix shift and we had more incentive comp, we had higher R&D, which are all things that needed to happen in the platform. And we've moved margins up every quarter, and in 2018, and we fully expect to continue to expand margins for EPD. But if you look back to what happened in the fourth quarter of last year, we had a really bad step down in gross margins and operating income. So what I'll say it is, we don't expect to have that drop back in, in this fourth quarter of this year.

Steven Fisher -- UBS -- Analyst

Got it. And then just on the power side of things, you listed in your slides a few drivers be it thermal solar and nuclear upgrades, are these big enough to stabilize the bookings, and if so, when do you think we could see those bookings kind of stabilized on a year-over-year basis?

Scott Rowe -- President and Chief Executive Officer

Yeah. I would love to say the answer to that is, yes, but it's no. Here we've got a -- those are the only green shoots we could point in the power industry out there. And so, we do have a unique and a preferred offering for concentrated solar power. It's just -- we just don't have a big project list there to overcome the declines in the rest of the power market. And then on the nuclear side, we're getting aftermarket and there's a few things, but it's just not enough to get back. And I just think powers, it's a very challenge market. I think, it will remain challenged in 2019, and hopefully we start to see some improvement there in 2020 and beyond.

Steven Fisher -- UBS -- Analyst

Great. Thanks a lot.

Operator

Our next question comes from Joe Giordano from Cowen. Please go ahead.

Joe Giordano -- Cowen -- Analyst

Hey guys, good morning.

Scott Rowe -- President and Chief Executive Officer

Hi, Joe.

Lee Eckert -- Chief Financial Officer

Good morning, Joe.

Joe Giordano -- Cowen -- Analyst

Hey, so on the past-due backlog, we've talked a lot about it. But are you confident that you've identified like the root cause of these things. I'm a little surprised to hear that it's coming from stuff you booked late last year, like, is this a business problem where you shouldn't have been taking these projects at all, or is it more of a behavioral issue, you feel like your pricing them appropriately given the complexity maybe give some color there?

Scott Rowe -- President and Chief Executive Officer

Sure. Yeah, it is -- unfortunately, it's a broad comment and there's not one issue and each of our plants has slightly different issues. And again, what I'd say is, that we've got a lot of attention and focus on this that, that really wasn't the case two years ago, or even a year ago. And we stood up this manufacturing group that started in February. So we've got VP, the Manufacturing Operations in each of our platforms and we've got up planning organization that is now really focused on the blocking and tackling of production planning and improving the longer-term planning with sales and operational planning. And so, I actually feel that we've made progress. It just didn't come through in the quarter. I think we'll see a nice drop here in the fourth quarter. And I would say by kind of mid into next year, this will not be an issue for Flowserve. And so we are -- we've got organization in place. We started to put the proper processes in place to make sure we're doing the right things. And then ultimately we switched the systems, tools and visibilities that make sure that this is, it doesn't go backwards as Flowserve continues to grow and so. I do think where we make progress, but again it's been a painful area for us, and it's one that I'm highly focused on, and I've spent a lot of time in our facilities talking through the challenges and what they need to do to get this corrected as we go forward.

Joe Giordano -- Cowen -- Analyst

Okay. That's fair. On the CapEx side, are you surprised to be cutting CapEx numbers here? I know, you're being very targeted in where you're putting capital on the far side, which is good. Other bottlenecks to deploying growth capital as you kind of go through the process here?

Scott Rowe -- President and Chief Executive Officer

No, I really think it's more just been really, really disciplined, And yeah, last year was the first year, when I kind of went through this process. And there is a lot on the wish list from our group and we weren't sure kind of what was real and what was needed. And so what I'd say is, I'm actually pleased that we've restrained that the spending this year and it's not, it's not going to impede our ability to grow. And what I would say is the investment focus this year has really been around enterprise wide systems to fix systemic problems like past-due backlog and ability to work things across to our enterprise. And so most of the spending this year was in IT and around enterprise systems. We actually -- we just went live with our enterprisewide CRM system this month, in October. And we've now -- we're in the process of putting in enterprise wide PLM, or engineering system, and we've just launched our ERP program and projects on the essence. So, I'd say, we'll get into a little more detail in December about what our strategy is around systems and really try to drive an enterprise focus. But back-to-capital, I'm actually pleased that we're able to be a little more discreet and what we spend our money on the number makes sense and what I'd say for next year's will need to move that up a little bit as we start to really sharpen our pencils on the needed things around our operations and around growth, but we'll note that number up in 2019 and continue the investment on enterprise wide systems.

Joe Giordano -- Cowen -- Analyst

Just last from me and kind of an extension on that as you've gone through this, have any parts of the business come up later where you're saying, well, now you have a better understanding of what you're going to need to do to spend to make them successful that maybe we're not the right owners that maybe things that weren't up for divestiture six months ago. Now you're realizing that it's not where we want to deploy capital?

Scott Graham -- BMO Capital Markets -- Analyst

Yeah. And I think, it's a great question and the more I learned about our business and the more I learned about what we can do really well and things that we can't. There are -- we're constantly reevaluating our portfolio and what we want to take forward. So what I would say is, there is no major divestiture plans at this point. But there's probably a handful of things that are relatively small, that are more of a distraction and could probably be better suited in somebody else's hands. But these won't be big needle movers, but it will actually allow us to be much more focused on the things that we do really well on, and focus more on servicing our customers and providing profitable returns.

Joe Giordano -- Cowen -- Analyst

Thanks, guys.

Operator

Our next question comes from Walter Liptak from Seaport Global. Please go ahead.

Walter Liptak -- Seaport Global -- Analyst

Hi, thanks guys for taking my question. I wanted to ask about the bigger jobs that you talked about growing FID, and it sounds like there's a couple of buckets of refined fuels and LNG, is there anything else that you kind of looking at?

Scott Rowe -- President and Chief Executive Officer

Yeah. I think that the two were most excited about our LNG and the IMO 2020 upgrades on refined fuels. So those are probably the two biggest categories into 2019. The other thing is, we're starting to see some green shoots on the upstream production side. And so we have historically done well and production facilities and that's been incredibly depressed market here for the last four years. And so that would be an area that we would hope to increase as we go into 2019, but will probably be in the back half and 2019. And then the other area that we are getting more and more excited about is just the North American midstream. And so with that, think your interstate pipeline and then terminals and storage. And so there is clearly a build out there and what I would say is, we kind of looked away from that market historically and now it's one that we've now turned more of an attention to, and there's a lot of capital being spent in 2019.

And then I'll just go through all the markets, right. So chemical also and so we've had pretty good growth here in chemicals over the last two years, but we definitely see a continued build-out on both greenfield and brownfield on the chemical side. So kind of back to my earlier comments, I feel reasonably good about our customer spending money and on infrastructure in 2019. And so we are tracking lots of projects and some will get pushed out, but for the most part, we feel good about what comes in the FID and our ability to win that work.

Walter Liptak -- Seaport Global -- Analyst

Okay. Yeah. It sounds like a lot in front here. So going into the refined fuel and the LNG projects as you have your line of sight on these, would you expect orders in -- or these FIDs going in the first half, where the second half, we're more second half weighted, what do you think about the timing for this figure?

Scott Rowe -- President and Chief Executive Officer

Well, if I could answer that question, I should be in a different job, because that's a difficult one. And so we've been surprised this year at FIDs that actually got pulled up ahead of expectations and then we've been surprised the opposite side and moving right. It's really, really hard to predict when things come into FID. And unfortunately, it's lumpy and that's going to sway our bookings. But what I can say is, our guys are talking to the right folks with our customers, we're in their offices, and we're trying to really get diligent about predicting when the bookings come in, and allowing our operations to plan appropriately. So, we don't get in trouble like we did this year on some of the past-due stuff.

Walter Liptak -- Seaport Global -- Analyst

Okay. On those -- and the early ones that could happen next year, and do FID are you guys designed into those are already? So it's sort of your locked and loaded, or these things where they go FID, and then jobs go out to bid to you?

Scott Rowe -- President and Chief Executive Officer

Yeah. There are very, very few opportunities where we get speced at, but what I'd say is, yeah, we are highly competitive in what we provide and what we offer. And so we're not afraid to compete with the peer group, then we're going to win our share. But now it is a competitive landscape in both on the valves and the pump side. But we feel good about our ability to win, when we're targeted and focused on winning that work.

Walter Liptak -- Seaport Global -- Analyst

Okay. And then just a last one for me. What's -- and it is probably a tough one too, but what's the timing on like FID to when you start shipping, or you have the booking and then the shipment goes out like what's -- is it the bid cycle, a six-month cycle or a year cycle?

Scott Rowe -- President and Chief Executive Officer

Yeah, it really depends on whether it's pumps or valves and it depends on what type of project it is. And so, I would say like a big greenfield LNG, you're going to see significant delays between FID and order placement in our delivery. And things that have our equipment installed base there between FID and order placement, and the pump side should be relatively fast and we can deliver in kind of six months to nine months. So it's just -- it's a real kind of mix in terms of when those deliveries are and what we're tracking has kind of all three flavors in there right now.

Walter Liptak -- Seaport Global -- Analyst

Okay, great. Thanks for the detail.

Scott Rowe -- President and Chief Executive Officer

It's OK.

Operator

Thank you, ladies and gentlemen, we have reached our allotted time. This concludes today's conference. Thank you for participating and you may now disconnect.

Duration: 60 minutes

Call participants:

Jay Roueche -- Vice President of Investor Relations and Treasurer

Scott Rowe -- President and Chief Executive Officer

Lee Eckert -- Chief Financial Officer

Charley Brady -- SunTrust Robinson -- Analyst

Andrew Kaplowitz -- Citi -- Analyst

Scott Graham -- BMO Capital Markets -- Analyst

Josh Pokrzywinski -- Morgan Stanley -- Analyst

Deane Dray -- RBC Capital Markets -- Analyst

Joe Ritchie -- Goldman Sachs -- Analyst

Jeff Hammond -- KeyBanc Capital Markets -- Analyst

Steven Fisher -- UBS -- Analyst

Joe Giordano -- Cowen -- Analyst

Walter Liptak -- Seaport Global -- Analyst

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