Ingersoll Rand Reports Record Third-Quarter 2022 Results

Strong Double-Digit Orders and Revenue Growth; Raising Guidance for Organic Growth and Mid-point of Adjusted EBITDA Range

Third-Quarter 2022 Highlights

(All comparisons against the third-quarter of 2021 unless otherwise noted.)

Strong performance driven by its competitive differentiator – Ingersoll Rand Execution Excellence (IRX):

• Record third-quarter orders of $1,655 million, up 10%, or 14% organic
• Record third-quarter revenues of $1,516 million, up 14%, or 18% organic
• Reported net income attributable to Ingersoll Rand of $145 million, or earnings of $0.36 per share
  • Adjusted net income from continuing operations, net of tax¹ of $253 million, or $0.62 per share
• Adjusted EBITDA¹ of $376 million, up 20%, with a margin of 24.8%, up 110 basis points year over year, and incremental margin of 33%
• Reported operating cash flow from continuing operations of $274 million and free cash flow from continuing operations of $253 million
• Liquidity of $2.6 billion as of September 30, 2022, including $1.5 billion of cash on hand and undrawn capacity of $1.1 billion under available credit facilities

Capital Allocation Highlights

• Announced/acquired several high-value strategic bolt-ons which both strengthen our core portfolio as well as expand to close adjacencies:
  • SPX Flow Air Treatment – Leading manufacturer of reliable and energy efficient desiccant and refrigerated dryers, filtration systems and purifiers for dehydration in compressed air
  • Dosatron International – U.S. leader in water-powered flow solutions and IIoT for hydroponics and agriculture markets
  • Everest Group – Leading Indian manufacturer of blower and vacuum systems
  • Pedro Gil – Leading Spanish manufacturer of blower and vacuum equipment and systems
  • Westwood Technical – Highly experienced IIoT, controls and instrumentation specialist
  • Airmax Groupe – Leading full service provider of air compressors and compressed air system services in France
• Repurchased approximately 0.1 million shares for approximately $4 million

2022 Guidance

• Raising full-year 2022 organic revenue growth range expectation by 100 bps to 12% to 14%, and re-affirming total revenue growth of 11% to 13%
• Raising Adjusted EBITDA¹ guidance to a range of $1,400 to $1,425 million despite an incremental ~$20 million of expected FX headwinds vs prior guidance

DAVIDSON, N.C.–(BUSINESS WIRE)–Ingersoll Rand Inc. (NYSE: IR) reported record third-quarter orders and revenue.

“Once again, we delivered robust quarterly earnings results despite broad macroeconomic headwinds, demonstrating the resiliency of our business,” said Vicente Reynal, Chairman and CEO. “We secured a record third quarter through strong growth across multiple metrics driven by our agility and continued commitment to our operational excellence model, IRX. We also announced six highly-strategic bolt-on acquisitions in the quarter that strengthen our position in core categories and broaden our exposure to high-growth, sustainable end markets. We continue to deliver innovative products and solutions for our customers, enabling our above-market performance and ability to raise our full-year 2022 guidance.” Reynal added, “Aligned to our strategic imperative to Lead Sustainably, we are also very proud to announce recognition by S&P Global that as of October 21^st, Ingersoll Rand performed in the top 1% globally of companies in our industry in the S&P Global Corporate Sustainability Assessment. Sustainability continues to be a key growth enabler for our company and fuels our purpose of making life better.”

___________________________

Third-Quarter 2022 Segment Review

(All comparisons against the third-quarter of 2021 unless otherwise noted.)

Industrial Technologies and Services Segment: broad range of compressor, vacuum and blower solutions as well as industrial technologies including power tools and lifting equipment

• Reported Orders of $1,355 million, up 10%, or 16% organic
• Reported Revenues of $1,200 million, up 12%, or 19% organic
• Reported Segment Adjusted EBITDA of $314 million, up 15% with an incremental margin of 32%
• Reported Segment Adjusted EBITDA Margin of 26.2%, up 70 basis points, fueled by the use of IRX to drive strong operational execution
• Core industrial end markets saw continued strong demand with organic orders up 16% as compared to prior year, which exceeded 31% organic orders growth in the third-quarter of the prior year. Excluding the impact of FX, orders for total compressor offerings, which represent approximately 65% of the total segment, grew high double digits, including 20% growth in oil free compressor offerings. Orders in Power Tools and Lifting were up high double digits.

Precision and Science Technologies Segment: highly specialized fluid management solutions including precision liquid and gas pumps and niche compression technologies

• Reported Orders of $299 million, up 12%, or 3% organic
• Reported Revenues of $316 million, up 24%, or 15% organic
• Reported Segment Adjusted EBITDA of $92 million, up 22% with an incremental margin of 27%
• Reported Segment Adjusted EBITDA Margin of 29.1%, down 60 basis points, driven primarily by the impact of acquisitions and prior year COVID-19-related demand. Sequentially, Adjusted EBITDA Margin improved 230 basis points as compared to the second quarter due to improved price/cost performance and operational execution
• Excluding the impact of FX, orders increased 21% as compared to the prior year driven primarily by acquisitions as well as strong growth from the Milton Roy and YZ Systems product lines, which largely serve industrial end markets. Accelerated performance offset the expected decline from the Thomas business due to prior year COVID-19-related demand.

Balance Sheet and Cash Flow

Ingersoll Rand remains in a strong financial position with ample liquidity of $2.6 billion. On a reported basis, the company generated $274 million of cash flow from operating activities from continuing operations and invested $22 million in capital expenditures, resulting in free cash flow from continuing operations² of $253 million, compared to cash flow from operating activities from continuing operations of $146 million and free cash flow from continuing operations² of $131 million in the prior year period. Prior year cash flow from operating activities from continuing operations and free cash flow from continuing operations both included an outflow of $220 million for cash taxes related to divestitures as well as a cash inflow of $49 million from Trane Technologies for IR merger post-closing adjustments. Net debt to Adjusted EBITDA leverage was 1.0x for the third-quarter, which was an improvement of 0.1x as compared to the prior quarter. Consistent with our comprehensive capital allocation strategy led by M&A, Ingersoll Rand announced six bolt-on acquisitions and deployed $4 million to share repurchases and $8 million to its dividend payment during the third-quarter.

___________________________

2022 Guidance

Ingersoll Rand is raising its guidance for full year 2022 organic revenue growth and Adjusted EBITDA based on its expectations of strong commercial and operational performance for the remainder of the year:

Conference Call

Ingersoll Rand will host a live earnings conference call to discuss the third-quarter results on Thursday, November 3, 2022 at 8:00 a.m. (Eastern Time). To participate in the call, please dial 1-833-927-1758, domestically, or 1-929-526-1599, internationally, and use access Code 174957. A real-time audio webcast of the presentation can be accessed via the Events and Presentations section of the Ingersoll Rand Investor Relations website here, where related materials will be posted prior to the conference call. A replay of the webcast will be available after conclusion of the conference and can be accessed on the Ingersoll Rand Investor Relations website.

Forward-Looking Statements

This news release contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, including statements related to Ingersoll Rand Inc.’s (the “Company” or “Ingersoll Rand”) expectations regarding the performance of its business, its financial results, its liquidity and capital resources and other non-historical statements. These forward-looking statements generally are identified by the words “believe,” “project,” “expect,” “anticipate,” “estimate,” “forecast,” “outlook,” “target,” “endeavor,” “seek,” “predict,” “intend,” “strategy,” “plan,” “may,” “could,” “should,” “will,” “would,” “will be,” “on track to” “will continue,” “will likely result,” “guidance” or the negative thereof or variations thereon or similar terminology generally intended to identify forward-looking statements. All statements other than historical facts are forward-looking statements.

These forward-looking statements are based on Ingersoll Rand’s current expectations and are subject to risks and uncertainties, which may cause actual results to differ materially from these current expectations. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those indicated or anticipated by such forward-looking statements. The inclusion of such statements should not be regarded as a representation that such plans, estimates or expectations will be achieved. Important factors that could cause actual results to differ materially from such plans, estimates or expectations include, among others, (1) the impact on the Company’s business, suppliers and customers and global economic conditions of the COVID-19 pandemic, including business disruptions caused by government restrictions; (2) unexpected costs, charges or expenses resulting from completed and proposed business combinations; (3) uncertainty of the expected financial performance of the Company; (4) failure to realize the anticipated benefits of completed and proposed business combinations; (5) the ability of the Company to implement its business strategy; (6) difficulties and delays in achieving revenue and cost synergies; (7) inability of the Company to retain and hire key personnel; (8) evolving legal, regulatory and tax regimes; (9) changes in general economic and/or industry specific conditions; (10) actions by third parties, including government agencies; (11) adverse impact on our operations and financial performance due to natural disaster, catastrophe, pandemic, geopolitical tensions or other events outside of our control; (12) the timing, manner and volume of repurchases of common stock pursuant to our share repurchase program; and (13) other risk factors detailed in Ingersoll Rand’s most recent Annual Report on Form 10-K filed with the Securities and Exchange Commission (the “SEC”), as such factors may be updated from time to time in its periodic filings with the SEC, which are available on the SEC’s website at http://www.sec.gov. The foregoing list of important factors is not exclusive.

Any forward-looking statements speak only as of the date of this release. Ingersoll Rand undertakes no obligation to update any forward-looking statements, whether as a result of new information or development, future events or otherwise, except as required by law. Readers are cautioned not to place undue reliance on any of these forward-looking statements.

About Ingersoll Rand Inc.

Ingersoll Rand Inc. (NYSE:IR), driven by an entrepreneurial spirit and ownership mindset, is dedicated to helping make life better for our employees, customers and communities. Customers lean on us for our technology-driven excellence in mission-critical flow creation and industrial solutions across 40+ respected brands where our products and services excel in the most complex and harsh conditions. Our employees develop customers for life through their daily commitment to expertise, productivity and efficiency. For more information, visit www.IRCO.com.

Non-U.S. GAAP Measures of Financial Performance

In addition to consolidated GAAP financial measures, Ingersoll Rand reviews various non-GAAP financial measures, including “Organic Revenue Growth,” “Adjusted EBITDA,” “Adjusted Net Income,” “Adjusted Diluted EPS” and “Free Cash Flow.”

Ingersoll Rand believes Adjusted EBITDA, Adjusted Net Income, and Adjusted Diluted EPS are helpful supplemental measures to assist management and investors in evaluating the Company’s operating results as they exclude certain items that are unusual in nature or whose fluctuation from period to period do not necessarily correspond to changes in the operations of Ingersoll Rand’s business. Ingersoll Rand believes Organic Revenue Growth is a helpful supplemental measure to assist management and investors in evaluating the Company’s operating results as it excludes the impact of foreign currency and acquisitions on revenue growth. Adjusted EBITDA represents net income before interest, taxes, depreciation, amortization and certain non-cash, non-recurring and other adjustment items. Adjusted Net Income is defined as net income including interest, depreciation and amortization of non-acquisition related intangible assets and excluding other items used to calculate Adjusted EBITDA and further adjusted for the tax effect of these exclusions. Organic Revenue Growth is defined as As Reported Revenue growth less the impacts of Foreign Currency and Acquisitions. Ingersoll Rand believes that the adjustments applied in presenting Adjusted EBITDA and Adjusted Net Income are appropriate to provide additional information to investors about certain material non-cash items and about non-recurring items that the Company does not expect to continue at the same level in the future. Adjusted Diluted EPS is defined as Adjusted Net Income divided by Adjusted Diluted Average Shares Outstanding. Incrementals/Decrementals are defined as the change in Adjusted EBITDA versus the prior year period divided by the change in revenue versus the prior year period.

Ingersoll Rand uses Free Cash Flow to review the liquidity of its operations. Ingersoll Rand measures Free Cash Flow as cash flows from operating activities less capital expenditures. Ingersoll Rand believes Free Cash Flow is a useful supplemental financial measures for management and investors in assessing the Company’s ability to pursue business opportunities and investments and to service its debt. Free Cash Flow is not a measure of our liquidity under GAAP and should not be considered as an alternative to cash flows from operating activities.

Management and Ingersoll Rand’s board of directors regularly use these measures as tools in evaluating the Company’s operating and financial performance and in establishing discretionary annual compensation. Such measures are provided in addition to, and should not be considered to be a substitute for, or superior to, the comparable measures under GAAP. In addition, Ingersoll Rand believes that Organic Revenue Growth, Adjusted EBITDA, Adjusted Net Income, Adjusted Diluted EPS, Incrementals/Decrementals and Free Cash Flow are frequently used by investors and other interested parties in the evaluation of issuers, many of which also present Adjusted EBITDA, Adjusted Net Income, Adjusted Diluted EPS, and Free Cash Flow when reporting their results in an effort to facilitate an understanding of their operating and financial results and liquidity.

Organic Revenue Growth, Adjusted EBITDA, Adjusted Net Income, Adjusted Diluted EPS and Free Cash Flow should not be considered as alternatives to revenue growth, net income, diluted earnings per share or any other performance measure derived in accordance with GAAP, or as alternatives to cash flow from operating activities as a measure of our liquidity. Organic Revenue Growth, Adjusted EBITDA, Adjusted Net Income, Adjusted Diluted EPS and Free Cash Flow have limitations as analytical tools, and you should not consider such measures either in isolation or as substitutes for analyzing Ingersoll Rand’s results as reported under GAAP.

Reconciliations of Organic Revenue Growth, Adjusted EBITDA, Adjusted Net Income, Adjusted Diluted EPS and Free Cash Flow to their most comparable U.S. GAAP financial metrics for historical periods are presented in the tables below.

Reconciliations of non-GAAP measures related to full-year 2022 guidance have not been provided due to the unreasonable efforts it would take to provide such reconciliations due to the high variability, complexity and uncertainty with respect to forecasting and quantifying certain amounts that are necessary for such reconciliations, including net income (loss) and adjustments that could be made for acquisitions-related expenses, restructuring and other business transformation costs, gains or losses on foreign currency exchange and the timing and magnitude of other amounts in the reconciliation of historic numbers. For the same reasons, we are unable to address the probable significance of the unavailable information, which could have a potentially unpredictable, and potentially significant, impact on our future GAAP financial results.

Contacts

Investor Relations:

Matthew Fort

matthew.fort@irco.com

Media:

Samantha Hamlin

samantha.hamlin@irco.com

Read full story here