Highlights (Second quarter 2019 versus second quarter 2018,
unless otherwise noted):
- Continuing EPS of $1.88, up 3 percent; adjusted continuing
EPS* of $2.09, up 13 percent
- Strong HVAC and Industrial bookings growth
- Reported and organic revenues* up 4 percent led by the
Climate segment
- Operating margin down 30 bps; adjusted operating margin* up
80 bps, led by Climate
- Closed on Precision Flow Systems acquisition in Mid-May
*This news release contains non-GAAP financial measures.
Definitions of the non-GAAP financial measures can be found in the
footnotes of this news release. See attached tables for additional
details and reconciliations.
Ingersoll-Rand plc (NYSE:IR), a world leader in creating
comfortable, sustainable and efficient environments, today reported
diluted earnings per share (EPS) from continuing operations of
$1.88 for the second quarter of 2019. Adjusted continuing EPS of
$2.09 excludes restructuring costs of $26 million primarily related
to ongoing footprint optimization and acquisition and Industrial
segment separation related costs of $33 million.
Second-Quarter 2019 Results
Financial Comparisons - Second-Quarter Continuing
Operations
$, millions except EPS
Q2 2019
Q2 2018
Y-O-Y Change
Organic Y-O-Y Change
Bookings
$4,446
$4,549
(2)%
(2)%
Net Revenues
$4,528
$4,358
4%
4%
Operating Income
$651
$640
2%
Operating Margin
14.4%
14.7%
(30 bps)
Adjusted Operating Income*
$710
$647
10%
Adjusted Operating Margin
15.7%
14.9%
80 bps
Continuing EPS
$1.88
$1.82
3%
Adjusted Continuing EPS
$2.09
$1.85
13%
Restructuring Cost
($26.4)
($7.1)
($19.3)
“We continue to see strong HVAC markets globally with 2019
shaping up largely as we anticipated when we gave guidance at the
beginning of the year,” said Michael W. Lamach, chairman and chief
executive officer. “Our disciplined execution of our strategy and
business operating system will allow us to successfully navigate
the evolving global landscape and deliver another year of top-tier
financial performance. This gives us confidence to increase our
fiscal 2019 adjusted continuing EPS guidance from approximately
$6.35 to approximately $6.40.
We are making good progress against the strategic announcement
we made last quarter to combine our Industrial segment and Gardner
Denver, creating a premier industrial company while simultaneously
creating a leading, pure-play Climate solutions company focused on
HVAC and transport refrigeration. Separation, integration planning
and Climate business transformation activities are well under way.
We expect to complete the separation by early 2020 as planned.
We’re excited about both of the new, premier businesses and their
ability to unlock value for shareholders.
Additionally in the second quarter, we closed on the Precision
Flow Systems acquisition and this business is expected to meet the
financial objectives we communicated with the announcement.”
Highlights from the Second Quarter of 2019 (all comparisons
against the second quarter of 2018 unless otherwise noted)
- Solid reported and organic revenue growth led by our Climate
businesses in virtually all products and geographies.
- Enterprise reported revenue growth included approximately 1
percentage point of growth from acquisitions offset by
approximately 1 percentage points of negative foreign exchange
impact.
- Enterprise reported bookings and organic bookings* down 2
percent. Enterprise and Climate bookings growth rates were heavily
impacted by difficult comparisons related to exceptional North
American Trailer and APU bookings growth in Q2 2018. Excluding
Transport bookings, strong underlying organic bookings in most
major businesses led to mid-single digit organic bookings growth
for both the Enterprise and for the Climate segment.
- Operating margin down 30 basis points; adjusted operating
margin up 80 basis points driven by strong price realization,
volume growth and productivity partially offset by material
inflation, including tariffs, other inflation and continued
business investments.
Second-Quarter Business Review (all comparisons against the
second quarter of 2018 unless otherwise noted)
Climate Segment: delivers energy-efficient products and
innovative energy services. The segment includes Trane® and
American Standard® Heating & Air Conditioning which provide
heating, ventilation and air conditioning (HVAC) systems, and
commercial and residential building services, parts, support and
controls; energy services and building automation through Trane
Building Advantage™ and Nexia™; and Thermo King® transport
temperature control solutions.
$, millions
Q2 2019
Q2 2018
Y-O-Y Change
Organic Y-O-Y Change
Bookings
$3,533
$3,729
(5)%
(4)%
Net Revenues
$3,618
$3,494
4%
5%
Operating Income
$613.5
$582.7
5%
Operating Margin
17.0%
16.7%
30 bps
Adjusted Operating
Income
$626.9
$586.9
7%
Adjusted Operating
Margin
17.3%
16.8%
50 bps
- Revenue up 4 percent with organic revenue up 5 percent. Strong
organic HVAC revenue growth in virtually all businesses and
regions.
- Climate reported revenue growth offset by approximately 1
percentage point of negative foreign exchange impact.
- Climate bookings down 5 percent and organic bookings down 4
percent. Climate bookings growth rates heavily impacted by the
aforementioned exceptional North American trailer and APU bookings
in Q2 2018. Excluding Transport, Climate segment organic bookings
were strong, up mid-single digits in the quarter.
- Operating margin improved 30 basis points; adjusted operating
margin improved 50 basis points driven by volume growth, strong
price realization and productivity; partially offset by
inflationary headwinds and continued business investments.
Industrial Segment: delivers products and services that
enhance energy efficiency, productivity and operations. The segment
includes compressed air and gas systems and services, power tools,
material handling systems, fluid management systems, as well as
Club Car® golf, utility and consumer low-speed vehicles.
$, millions
Q2 2019
Q2 2018
Y-O-Y Change
Organic Y-O-Y Change
Bookings
$913
$821
11%
8%
Net Revenues
$910
$864
5%
2%
Operating Income
$110.1
$121.2
(9%)
Operating Margin
12.1%
14.0%
(190 bps)
Adjusted Operating
Income
$130.0
$122.7
6%
Adjusted Operating
Margin
14.3%
14.2%
10 bps
- Bookings up 11 percent and revenue up 5 percent. Organic
bookings up 8 percent with organic revenue up 2 percent. Strong
bookings growth driven by long-cycle projects, services, Asia and
Small Electric Vehicles.
- Industrial reported revenue growth included approximately 6
percentage points of growth from acquisitions offset by
approximately 3 percentage points of negative foreign exchange
impact.
- Operating margin down 190 basis points; adjusted operating
margins up 10 basis points driven by volume, pricing and
productivity, partially offset by inflationary headwinds and lower
mix of short-cycle revenues which tend to have higher margins.
Balance Sheet and Cash Flow
$, millions
Q2 2019
Q2 2018
Y-O-Y Change
Cash From Continuing Operating
Activities Y-T-D
$422
$415
$7
Free Cash Flow Y-T-D*
$345
$272
$73
Working Capital/Revenue*
6.7%
5.5%
120 bps increase
Cash Balance 30 June
$876
$970
($94)
Debt Balance 30 June
$5,750
$4,339
$1,411
- June 2019 year-to-date cash flow from continuing operating
activities was $422 million, consistent with the Company’s
expectations.
- The Company's full year 2019 free cash flow target remains
equal to or greater than 100 percent of adjusted net
earnings*.
- During March 2019, the Company completed a $1.5 billion senior
notes offering. Annual interest on this debt is approximately $60
million; Approximately $47 million in 2019.
Capital Deployment
- Continued execution of a balanced capital allocation
strategy.
- Year to date, the Company has returned approximately $509
million to shareholders through share repurchases ($250 million)
and dividends ($259 million).
- In May 2019, the company completed the acquisition of Precision
Flow Systems ("PFS") for approximately $1.45 billion.
- The Company expects to continue to deploy 100 percent of excess
cash to shareholders over time.
Tax Rate
- Q2 2019 adjusted effective tax rate* of approximately 20
percent. Full year adjusted effective tax rate guidance of
approximately 21 to 22 percent remains unchanged.
This news release includes “forward-looking statements,” which
are statements that are not historical facts, including statements
that relate to the mix of and demand for our products; performance
of the markets in which we operate; our share repurchase program
including the amount of shares to be repurchased and timing of such
repurchases; our capital allocation strategy including projected
acquisitions; restructuring activity; supplier disruption and our
expectations for resolving the disruption; our projected 2019
full-year financial performance and targets including assumptions
regarding our effective tax rate, tax reform measurement period
adjustments and other factors described in our guidance. These
forward-looking statements are based on our current expectations
and are subject to risks and uncertainties, which may cause actual
results to differ materially from our current expectations. Such
factors include, but are not limited to, global economic
conditions, the outcome of any litigation, demand for our products
and services, and tax law changes. Additional factors that could
cause such differences can be found in our Form 10-K for the year
ended December 31, 2018, as well as our subsequent reports on Form
10-Q and other SEC filings. Forward-looking statements may also
relate to our Reverse Morris Trust transaction with Gardner Denver
Holdings, Inc. (GDI). These forward-looking statements are based on
GDI’s and Ingersoll Rand’s current expectations and are subject to
risks and uncertainties, which may cause actual results to differ
materially from GDI’s and Ingersoll Rand’s 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) that one or more closing
conditions to the transaction, including certain regulatory
approvals, may not be satisfied or waived, on a timely basis or
otherwise, including that a governmental entity may prohibit, delay
or refuse to grant approval for the consummation of the proposed
transaction, may require conditions, limitations or restrictions in
connection with such approvals or that the required approval by the
stockholders of GDI may not be obtained; (2) the risk that the
proposed transaction may not be completed on the terms or in the
time frame expected by Ingersoll Rand or GDI, or at all, (3)
unexpected costs, charges or expenses resulting from the proposed
transaction, (4) uncertainty of the expected financial performance
of the combined company following completion of the proposed
transaction; (5) failure to realize the anticipated benefits of the
proposed transaction, including as a result of delay in completing
the proposed transaction or integrating the businesses of GDI and
Ingersoll Rand Industrial, or at all, (6) the ability of the
combined company to implement its business strategy; (7)
difficulties and delays in the combined company and ClimateCo
achieving revenue and cost synergies; (8) inability of the combined
company and ClimateCo to retain and hire key personnel; (9) the
occurrence of any event that could give rise to termination of the
proposed transaction; (10) the risk that stockholder litigation in
connection with the proposed transaction or other settlements or
investigations may affect the timing or occurrence of the proposed
transaction or result in significant costs of defense,
indemnification and liability, (11) evolving legal, regulatory and
tax regimes; (12) changes in general economic and/or industry
specific conditions; (13) actions by third parties, including
government agencies; and (14) other risk factors detailed from time
to time in Ingersoll Rand’s and GDI’s reports filed with the SEC,
including Ingersoll Rand’s and GDI’s annual reports on Form 10-K.
We assume no obligation to update these forward-looking
statements.
This news release also includes non-GAAP financial information
which should be considered supplemental to, not a substitute for,
or superior to, the financial measure calculated in accordance with
GAAP. The definitions of our non-GAAP financial information and
reconciliation to GAAP is attached to this news release.
All amounts reported within the earnings release above related
to net earnings (loss), earnings (loss) from continuing operations,
earnings (loss) from discontinued operations, and per share amounts
are attributed to Ingersoll Rand’s ordinary shareholders.
Ingersoll Rand (NYSE:IR) advances the quality of life by
creating comfortable, sustainable and efficient environments. Our
people and our family of brands - including Club Car®, Ingersoll
Rand®, Thermo King® and
Trane® - work together to enhance the
quality and comfort of air in homes and buildings; transport and
protect food and perishables; and increase industrial productivity
and efficiency. We are a global business committed to a world of
sustainable progress and enduring results. For more information,
visit ingersollrand.com.
7/30/19
(See Accompanying Tables)
- Table 1: Condensed Consolidated Income Statement
- Table 2: Business Review
- Tables 3 - 6: Reconciliation of GAAP to Non-GAAP
- Table 7: Condensed Consolidated Balance Sheets
- Table 8: Condensed Consolidated Statement of Cash Flows
- Table 9: Balance Sheet Metrics and Free Cash Flow
*Q2 Non-GAAP measures definitions
Organic revenue is defined as GAAP net revenues adjusted
for the impact of currency and acquisitions. Organic
bookings is defined as reported orders in the current period
adjusted for the impact of currency and acquisitions.
- Currency impacts on net revenues and bookings are measured by
applying the prior year’s foreign currency exchange rates to the
current period’s net revenues and bookings reported in local
currency. This measure allows for a direct comparison of operating
results excluding the year-over-year impact of foreign currency
translation.
Adjusted operating income in 2019 is defined as GAAP
operating income plus restructuring costs, PFS acquisition-related
transaction costs, PFS inventory step-up and backlog amortization
and Industrial Segment separation-related cost. Adjusted operating
income in 2018 is defined as GAAP operating income plus
restructuring costs. Please refer to the reconciliation of GAAP to
non-GAAP measures on tables 3 and 4 of the news release.
Adjusted operating margin is defined as the ratio of
adjusted operating income divided by net revenues.
Adjusted earnings from continuing operations attributable to
Ingersoll-Rand plc (Adjusted net earnings) in 2019 is defined
as GAAP earnings from continuing operations attributable to
Ingersoll-Rand plc plus restructuring costs, PFS
acquisition-related transaction costs, PFS inventory step-up and
backlog amortization and Industrial Segment separation-related
costs, net of tax impacts. Adjusted net earnings in 2018 is defined
as GAAP earnings from continuing operations attributable to
Ingersoll-Rand plc plus restructuring costs, net of tax impacts and
tax reform provisional adjustments. Please refer to the
reconciliation of GAAP to non-GAAP measures on tables 3 and 4 of
the news release.
Adjusted continuing EPS in 2019 is defined as GAAP
continuing EPS plus restructuring costs, PFS acquisition- related
transaction costs, PFS inventory step-up and backlog amortization
and Industrial Segment separation-related costs, net of tax
impacts. Adjusted continuing EPS in 2018 is defined as GAAP
continuing EPS plus restructuring costs, net of tax impacts and tax
reform provisional adjustments. Please refer to the reconciliation
of GAAP to non-GAAP measures on tables 3 and 4 of the news
release.
Adjusted EBITDA is defined as adjusted operating income
plus depreciation and amortization expense plus or minus other
income / (expense), net.
Free cash flow in 2019 is defined as net cash provided by
(used in) continuing operating activities, less capital
expenditures, plus cash payments for PFS acquisition-related
transaction costs, Industrial Segment separation-related costs and
restructuring. Free cash flow in 2018 is defined as net cash
provided by (used in) continuing operating activities, less capital
expenditures plus cash payments for restructuring. In 2018, the
Company updated its definition of free cash flow to exclude the
impacts of discontinued operations. Please refer to the free cash
flow reconciliation on table 9 of the news release.
Working capital measures a firm’s operating liquidity
position and its overall effectiveness in managing the enterprises’
current accounts.
- Working capital is calculated by adding net accounts and
notes receivables and inventories and subtracting total current
liabilities that exclude short term debt, dividend payables and
income tax payables.
- Working capital as a percent of revenue is calculated by
dividing the working capital balance (e.g. as of June 30) by the
annualized revenue for the period (e.g. reported revenues for the
three months ended June 30 multiplied by 4 to annualize for a full
year).
Adjusted effective tax rate for 2019 is defined as the
ratio of income tax expense, plus or minus the tax effect of
adjustments for restructuring costs, PFS acquisition-related
transaction costs and PFS inventory step-up and backlog
amortization, divided by earnings from continuing operations before
income taxes plus restructuring costs, PFS acquisition-related
transaction costs, PFS inventory step-up and backlog amortization
and Industrial Segment separation-related costs. Adjusted effective
tax rate for 2018 is defined as the ratio of income tax expense,
plus or minus the tax effect of adjustments for restructuring costs
and provisional adjustments derived from Tax Reform, divided by
earnings from continuing operations before income taxes plus
restructuring costs. This measure allows for a direct comparison of
the effective tax rate between periods.
The Company reports its financial results in accordance with
generally accepted accounting principles in the United States
(GAAP). The following schedules provide non-GAAP financial
information and a quantitative reconciliation of the difference
between the non-GAAP financial measures and the financial measures
calculated and reported in accordance with GAAP.
The non-GAAP financial measures should be considered
supplemental to, not a substitute for or superior to, financial
measures calculated in accordance with GAAP. They have limitations
in that they do not reflect all of the costs associated with the
operations of our businesses as determined in accordance with GAAP.
In addition, these measures may not be comparable to non-GAAP
financial measures reported by other companies.
We believe the non-GAAP financial information provides important
supplemental information to both management and investors regarding
financial and business trends used in assessing our financial
condition and results of operations.
Non-GAAP financial measures assist investors with analyzing our
business results as well as with predicting future performance. In
addition, these non-GAAP financial measures are also reviewed by
management in order to evaluate the financial performance of each
segment. Presentation of these non-GAAP financial measures helps
investors and management to assess the operating performance of the
Company.
As a result, one should not consider these measures in isolation
or as a substitute for our results reported under GAAP. We
compensate for these limitations by analyzing results on a GAAP
basis as well as a non-GAAP basis, prominently disclosing GAAP
results and providing reconciliations from GAAP results to non-GAAP
results.
Table 1
INGERSOLL-RAND PLC
Condensed Consolidated Income
Statement
(In millions, except per share
amounts)
UNAUDITED
For the quarter
For the six months
ended June 30,
ended June 30,
2019
2018
2019
2018
Net revenues
$
4,527.8
$
4,357.7
$
8,103.7
$
7,742.2
Cost of goods sold
(3,094.1
)
(2,964.1
)
(5,611.4
)
(5,384.3
)
Selling and administrative expenses
(783.2
)
(753.3
)
(1,523.3
)
(1,474.2
)
Operating income
650.5
640.3
969.0
883.7
Interest expense
(64.7
)
(50.3
)
(115.6
)
(123.2
)
Other income/(expense), net
3.4
(3.5
)
(15.4
)
(7.5
)
Earnings before income taxes
589.2
586.5
838.0
753.0
Provision for income taxes
(123.3
)
(128.0
)
(166.3
)
(161.0
)
Earnings from continuing operations
465.9
458.5
671.7
592.0
Discontinued operations, net of tax
(5.6
)
(5.9
)
(7.7
)
(15.3
)
Net earnings
460.3
452.6
664.0
576.7
Less: Net earnings attributable to
noncontrolling interests
(4.2
)
(4.5
)
(8.0
)
(8.2
)
Net earnings attributable to
Ingersoll-Rand plc
$
456.1
$
448.1
$
656.0
$
568.5
Amounts
attributable to Ingersoll-Rand plc
ordinary
shareholders:
Continuing operations
$
461.7
$
454.0
$
663.7
$
583.8
Discontinued operations
(5.6
)
(5.9
)
(7.7
)
(15.3
)
Net earnings
$
456.1
$
448.1
$
656.0
$
568.5
Diluted earnings
(loss) per share attributable to
Ingersoll-Rand plc
ordinary shareholders:
Continuing operations
$
1.88
$
1.82
$
2.71
$
2.32
Discontinued operations
(0.02
)
(0.03
)
(0.03
)
(0.06
)
Net earnings
$
1.86
$
1.79
$
2.68
$
2.26
Weighted-average number of common shares
outstanding:
Diluted
244.9
250.1
245.0
251.6
Table 2
INGERSOLL-RAND PLC
Business Review
(In millions, except
percentages)
UNAUDITED
For the quarter
For the six months
ended June 30,
ended June 30,
2019
2018
2019
2018
Climate
Net revenues
$
3,617.6
$
3,493.8
$
6,421.3
$
6,103.6
Segment operating income *
613.5
582.7
926.6
843.1
and as a % of Net
revenues
17.0
%
16.7
%
14.4
%
13.8
%
Industrial
Net revenues
910.2
863.9
1,682.4
1,638.6
Segment operating income *
110.1
121.2
194.0
181.1
and as a % of Net
revenues
12.1
%
14.0
%
11.5
%
11.1
%
Unallocated corporate expense
(73.1
)
(63.6
)
(151.6
)
(140.5
)
Total
Net revenues
$
4,527.8
$
4,357.7
$
8,103.7
$
7,742.2
Consolidated operating income
650.5
640.3
$
969.0
$
883.7
and as a % of Net
revenues
14.4
%
14.7
%
12.0
%
11.4
%
* Segment operating income is the measure of profit and
loss that the Company uses to evaluate the financial performance of
the business and as the basis for performance reviews, compensation
and resource allocation. For these reasons, the Company believes
that Segment operating income represents the most relevant measure
of segment profit and loss.
Table 3
INGERSOLL-RAND PLC
Reconciliation of GAAP to
non-GAAP
(In millions, except per share
amounts)
UNAUDITED
For the quarter ended June 30,
2019
For the six months ended June 30,
2019
As
As
As
As
Reported
Adjustments
Adjusted
Reported
Adjustments
Adjusted
Net revenues
$
4,527.8
$
—
$
4,527.8
$
8,103.7
$
—
$
8,103.7
Operating income
650.5
59.6
(a,b,c,d)
710.1
969.0
78.6
(a,b,c,d)
1,047.6
Operating margin
14.4
%
15.7
%
12.0
%
12.9
%
Earnings from continuing operations before
income taxes
589.2
59.6
(a,b,c,d)
648.8
838.0
78.6
(a,b,c,d)
916.6
Provision for income taxes
(123.3
)
(8.9
)
(e)
(132.2
)
(166.3
)
(11.3
)
(e)
(177.6
)
Tax rate
20.9
%
20.4
%
19.8
%
19.4
%
Earnings from continuing operations
attributable to Ingersoll-Rand plc
$
461.7
$
50.7
(f)
$
512.4
$
663.7
$
67.3
(f)
$
731.0
Diluted earnings per
common share
Continuing operations
$
1.88
$
0.21
$
2.09
$
2.71
$
0.27
$
2.98
Weighted-average number of common shares
outstanding:
Diluted
244.9
—
244.9
245.0
—
245.0
Detail of
Adjustments:
(a)
Restructuring costs
$
26.4
$
43.5
(b)
PFS acquisition-related transaction
costs
10.3
12.2
(c)
PFS inventory step-up and backlog
amortization
6.8
6.8
(d)
Industrial Segment separation-related
costs
16.1
16.1
(e)
Tax impact of adjustments (a,b,c)
(8.9
)
(11.3
)
(f)
Impact of adjustments on earnings from
continuing operations attributable to Ingersoll-Rand plc
$
50.7
$
67.3
Table 4
INGERSOLL-RAND PLC
Reconciliation of GAAP to
non-GAAP
(In millions, except per share
amounts)
UNAUDITED
For the quarter ended June 30,
2018
For the six months ended June 30,
2018
As
As
As
As
Reported
Adjustments
Adjusted
Reported
Adjustments
Adjusted
Net revenues
$
4,357.7
$
—
$
4,357.7
$
7,742.2
$
—
$
7,742.2
Operating income
640.3
7.1
(a)
647.4
883.7
51.5
(a)
935.2
Operating margin
14.7
%
14.9
%
11.4
%
12.1
%
Earnings from continuing operations before
income taxes
586.5
7.1
(a,b)
593.6
753.0
68.1
(a,b)
821.1
Provision for income taxes
(128.0
)
1.4
(c,d)
(126.6
)
(161.0
)
(12.0
)
(c,d)
(173.0
)
Tax rate
21.8
%
21.3
%
21.4
%
21.1
%
Earnings from continuing operations
attributable to Ingersoll-Rand plc
$
454.0
$
8.5
(e)
$
462.5
$
583.8
$
56.1
(e)
$
639.9
Diluted earnings per
common share
Continuing operations
$
1.82
$
0.03
$
1.85
$
2.32
$
0.22
$
2.54
Weighted-average number of common shares
outstanding:
Diluted
250.1
—
250.1
251.6
—
251.6
Detail of
Adjustments:
(a)
Restructuring costs
$
7.1
$
51.5
(b)
Debt redemption premium and related
charges
—
16.6
(c)
Tax impact of adjustments (a,b)
(0.2
)
(13.6
)
(d)
Tax impact for provisional adjustments
derived from Tax Reform
1.6
1.6
(e)
Impact of adjustments on earnings from
continuing operations attributable to Ingersoll-Rand plc
$
8.5
$
56.1
Table 5
INGERSOLL-RAND PLC
Reconciliation of GAAP to
non-GAAP
(In millions)
UNAUDITED
For the quarter ended June 30,
2019
For the quarter ended June 30,
2018
As Reported
Margin
As Reported
Margin
Climate
Net revenues
$
3,617.6
$
3,493.8
Segment operating income
$
613.5
17.0
%
$
582.7
16.7
%
Restructuring
13.4
0.3
%
4.2
0.1
%
Adjusted operating income
626.9
17.3
%
586.9
16.8
%
Depreciation and amortization
64.1
1.8
%
63.2
1.8
%
Other income/(expense), net
(7.0
)
(0.2
)%
0.7
—
%
Adjusted EBITDA *
$
684.0
18.9
%
$
650.8
18.6
%
Industrial
Net revenues
$
910.2
$
863.9
Segment operating income
$
110.1
12.1
%
$
121.2
14.0
%
Restructuring/Other **
19.9
2.2
%
1.5
0.2
%
Adjusted operating income
130.0
14.3
%
122.7
14.2
%
Depreciation and amortization ***
23.2
2.6
%
20.3
2.4
%
Other income/(expense), net
0.2
—
%
(2.0
)
(0.3
)%
Adjusted EBITDA
$
153.4
16.9
%
$
141.0
16.3
%
Corporate
Unallocated corporate expense
$
(73.1
)
$
(63.6
)
Restructuring/Other **
26.3
1.4
Adjusted corporate expense
(46.8
)
(62.2
)
Depreciation and amortization
8.1
10.9
Other income/(expense), net
10.2
(2.2
)
Adjusted EBITDA
$
(28.5
)
$
(53.5
)
Total Company
Net revenues
$
4,527.8
$
4,357.7
Operating income
$
650.5
14.4
%
$
640.3
14.7
%
Restructuring/Other **
59.6
1.3
%
7.1
0.2
%
Adjusted operating income
710.1
15.7
%
647.4
14.9
%
Depreciation and amortization ***
95.4
2.1
%
94.4
2.1
%
Other income/(expense), net
3.4
0.1
%
(3.5
)
(0.1
)%
Adjusted EBITDA
$
808.9
17.9
%
$
738.3
16.9
%
**Other within Industrial includes PFS inventory step-up
and backlog amortization. Other within Corporate includes PFS
acquisition-related transaction costs and Industrial Segment
separation-related costs. ***Depreciation and amortization excludes
PFS backlog amortization of $2.2 million which has been accounted
for in the Restructuring/Other line.
Table 6
INGERSOLL-RAND PLC
Reconciliation of GAAP to
non-GAAP
(In millions)
UNAUDITED
For the quarter
ended June 30,
2019
2018
Total Company
Adjusted EBITDA
$
808.9
$
738.3
Less: items to reconcile adjusted EBITDA
to net earnings attributable to Ingersoll-Rand plc
Depreciation and amortization ***
(95.4
)
(94.4
)
Interest expense
(64.7
)
(50.3
)
Provision for income taxes
(123.3
)
(128.0
)
Restructuring
(26.4
)
(7.1
)
PFS acquisition-related transaction
costs
(10.3
)
—
PFS inventory step-up and backlog
amortization
(6.8
)
—
Industrial Segment separation-related
costs
(16.1
)
—
Discontinued operations, net of tax
(5.6
)
(5.9
)
Net earnings attributable to
noncontrolling interests
(4.2
)
(4.5
)
Net earnings attributable to
Ingersoll-Rand plc
$
456.1
$
448.1
***Depreciation and amortization excludes PFS backlog
amortization of $2.2 million which has been accounted for in the
PFS inventory step-up and backlog amortization line.
Table 7
INGERSOLL-RAND PLC
Condensed Consolidated Balance
Sheets
(In millions)
June 30,
December 31,
2019
2018
ASSETS
UNAUDITED
Cash and cash equivalents
$
875.6
$
903.4
Accounts and notes receivable, net
3,108.3
2,679.2
Inventories, net
1,950.5
1,677.8
Other current assets
417.1
471.6
Total current assets
6,351.5
5,732.0
Property, plant and equipment, net
1,794.1
1,730.8
Goodwill
6,859.6
5,959.5
Intangible assets, net
4,230.3
3,634.7
Other noncurrent assets
1,432.1
857.9
Total assets
$
20,667.6
$
17,914.9
LIABILITIES AND EQUITY
Accounts payable
$
1,889.9
$
1,705.3
Accrued expenses and other current
liabilities
2,461.1
2,259.8
Short-term borrowings and current
maturities of long-term debt
829.2
350.6
Total current liabilities
5,180.2
4,315.7
Long-term debt
4,920.6
3,740.7
Other noncurrent liabilities
3,393.9
2,793.7
Shareholders' equity
7,172.9
7,064.8
Total liabilities and equity
$
20,667.6
$
17,914.9
Table 8
INGERSOLL-RAND PLC
Condensed Consolidated
Statement of Cash Flows
(In millions)
UNAUDITED
For six months
ended June 30,
2019
2018
Operating Activities
Earnings from continuing operations
$
671.7
$
592.0
Depreciation and amortization
186.9
187.8
Changes in assets and liabilities and
other non-cash items
(437.0
)
(365.3
)
Net cash provided by (used in) continuing
operating activities
421.6
414.5
Net cash provided by (used in)
discontinued operating activities
(27.9
)
(36.8
)
Net cash provided by (used in) operating
activities
393.7
377.7
Investing Activities
Capital expenditures
(116.7
)
(163.4
)
Acquisition and equity method investments,
net of cash acquired, and other
(1,470.6
)
(281.5
)
Net cash provided by (used in) investing
activities
(1,587.3
)
(444.9
)
Financing Activities
Short-term borrowings, net
179.0
242.6
Long-term borrowings, net of payments
1,490.4
24.1
Dividends paid to ordinary
shareholders
(259.4
)
(221.8
)
Repurchase of ordinary shares
(250.0
)
(500.1
)
Other financing activities, net
(0.7
)
(36.2
)
Net cash provided by (used in) financing
activities
1,159.3
(491.4
)
Effect of exchange rate changes on cash
and cash equivalents
6.5
(21.3
)
Net increase (decrease) in cash and cash
equivalents
(27.8
)
(579.9
)
Cash and cash equivalents - beginning of
period
903.4
1,549.4
Cash and cash equivalents - end of
period
$
875.6
$
969.5
Table 9
INGERSOLL-RAND PLC
Balance Sheet Metrics and Free
Cash Flow
($ in millions)
UNAUDITED
June 30,
June 30,
December 31,
2019
2018
2018
Net Receivables
$
3,108
$
2,947
$
2,679
Days Sales Outstanding
62.6
61.7
62.8
Net Inventory
$
1,951
$
1,733
$
1,678
Inventory Turns
6.3
6.8
6.5
Accounts Payable
$
1,890
$
1,832
$
1,705
Days Payable Outstanding
55.7
56.4
56.7
-------------------------------------------------------------------------------------------------------------------------------------------------------
Six months ended
Six months ended
June 30, 2019
June 30, 2018
Cash flow provided by continuing operating
activities
$
421.6
$
414.5
Capital expenditures
(116.7
)
(163.4
)
Cash payments for PFS acquisition-related
transactions
0.9
—
Cash payments for Industrial Segment
separation-related costs
0.8
—
Cash payments for restructuring
38.1
21.0
Free cash flow
$
344.7
$
272.1
View source
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