IR - Earnings call transcript Q2 2021

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Good day and thank you for standing by. Welcome to the Ingersoll Rand Second Quarter 2021 Earnings Conference Call. At this time all participants are in a listen-only mode. [Operator Instructions] I would now like to hand the conference over to your speaker today, Christopher Miorin, Vice President of Investor Relations. Please go ahead.

Chris Miorin

thank morning. the and technical with everyone this difficulty morning, you patience for the Good the Rand to Welcome Ingersoll earnings call. XXXX second quarter Chris of I'm President Vice Investor Relations. Miorin, and President joining Chief And Vicente Chief Reynal, is Executive Officer. me Officer Vik Kini, Financial and and earnings reference yesterday that We during release we call. the issued presentation our will Investor Both the of website, Relations are available www.irco.com. our section on

In available later addition, a today. replay of this conference call will be

details. to want on nature should I the start, filings, to risks subject this and statements call. this are we that SEC statements provided review remind information discussed Before certain read uncertainties the on in call forward-looking are previous more with in forward-looking the and X everyone slide on Please in our conjunction you which for

remarks, refer financial in will addition, certain to In measures. today's non-GAAP we

Investor find a GAAP accordance in our and offer update, most our earnings of these guidance. Relations and measures and release, presentation highlights review in of financial with calculated are strategy available measure reconciliation segment and to both section our comparable Company You the presented today's in on website. call, updated slide will a our of can the which Company provide we On XXXX

keep session, participants. for to Q&A each to to I'll over Vicente. this question we today's turn follow-up ask time, time and one For At one other caller allow for the call

Vicente Reynal

everyone. to we're see can you good on anchoring as targets. And achievement the realizing purpose, And of to three Chris. our morning our Thanks, Slide desired

today. key You will hear themes three

First, to shareholders. portfolio generate transformation we're significant advance for allocating our effectively value to capital

organic have thank will raising And IRX investments the all a are and touch are and also we highly the our their our I to working. of world combination I unique. dedication and excited never The the hear in our of want use illustrates ESG employees on demand and around Second, about owners. development who you Rand. more think engaged highly about will we which generation outperforming what Ingersoll of been makes determination. how is act like new third, journey. product workforce And state us guidance for

continue on health, We being. unwavering support safety an and well with employees to mental focus our

stay to strategic and Moving focus. priorities how of areas we five our on imperatives grounded are Slide four,

You right-hand we all that milestone touch traction in five side, the the will major see achieved another strategic on on substantial QX Operate we have during next imperatives. achieved in slide. imperative sustainably I'll

Moving can update. page. XXXX ESG during a on you further emphasize our to more team's goals couple our strong our of We'll on our time measurable focus The spend a details and XXXX sustainability as ESG and Slide I over report sustainability right high on the with weeks [bias] this data action to five, last targets next ago of reflects published we celebrates report report. and progress year now investor is, What scheduled for Friday the our [ph] this want see accountability.

team delivered focused have We diversity leadership XX% and and our respectively. board is extended which now and within XX% on

development goals have We to and XXXX our these improved new goals. aggressive address product launched XXXX and process

to they're even of one And owner. which employee things next sharing you into underrepresented We equity is based of acting the believe our grant by know That ever our with proud offer organizations look granting and well if we in directly on And impact grants of area more ownership equity powerful in We an populations changes. employed game company. has like governance thinking global of industrial ties the provided and aspect million week. a that's that changer. I how and ESG behalf corporate broad employees, as done through is see largest to increase, am efforts. forward rights stockholder $XXX standard equity I have employee We most an employees a

of off drive signing A and characteristics pump manufacturer. to highly the which that science of targeting as in agreements across displacement pull it positive market, Rand intend representative inorganic leader growth the the Maximus brand a sustainable pump through technology to is segment. and have on end GDP by we're digit tend will and shown the the Moving Solutions to organic our recognized to a our companies we grow growth in strong of software Seepex to double precision controls both these portfolio. that other adds well high And to technology to and technology strategy. acquire above to a become six, cavity Maximus of whose key player single part player global markets And Solutions, early Both focused number rates. progressive portfolio. since Seepex a premium markets is the our the is agritech estimation, market leverage new Ingersoll two are digit Slide XXXX.

to asset profiles of strong software anticipate have by acquisitions both streams, enhanced by as multiples yield market purchase EBITDA synergy pulse year addition, single-digit We In adjusted both digital a service. three ownership. revenue including

these expecting capital profiles XX% $X.X to high The an and us Slide return highly strategic of and acquisitions, acquisitions approximately how to M&A funnel. Which With leads add expansion. to which of addressable our characteristics PST two is impressive we're seven. on structuring market, are we're high-quality, indicative billion these

as using our execute backbone. IRX M&A to continue We its funnel

closing stages six site. is funnel funnel likelihood to probability calculate according of Our our we comprised when and is weighted of

also XX% Seepex as calculation. actively grown QX second has was Gardner has we sign as completed. excludes moved X% Denver revenue At to session removing And the revenue of even the weighted passed these larger be describes clear, our XXXX. was how approximately to funnel it Seepex we velocity were the remains the transaction quarter, With it funnel learned assignment XXX% in Flow. contribution size M&A our accelerated it since until size after well Ingersoll was state, our of active funnel funnel it Rand quarter, deals our current materially we became owner and and XX SPX this now instance, and of in versus not times the just then and it is Last out funnel Maximus was for some five average targets from in that the on been and meaningfully. engaged And the and For time.

As in see, we momentum full motion. the have you flywheel in significant our and funnel is can

we Regarding issued that saw stating release SPX a press pursue Flow, alternatives. they will strategic this they Monday that

SPX estimates. per of and $XX share Our which is offer was fully for accounted ahead preemptive [indiscernible] Flow consensus plan

any We of all SPX will we intend no of can if alternative there we our In assurances remain transactions. very do that know funnel is received when M&A SPX a important also rejection terms of flow, executing that from we part as other to opportunities. than be the as with strategic ago, we And process. pivoted It participate. approach, offer on in to disciplined Flow's to process month confirm we preemptive second our such more our

And sizes much very we now highly the with do. current it We have is a approach always visiting we more important and demonstrated everything when believe distance in this environment.

with execute sufficient even as hand flow did volume stated it cash exemplifies funnel liquidity. opportunities our as last we the opportunities. our billion which SPX to in robust in remains with on $X.X and And these have quarter, excluded, future of As potential quality

disciplined to later that in now communicate continue However, this call will in an provide QX as with noted, know environment. review formally year. topic we this to capital turn also Vik important update and more on to our very on performance. priorities the our to intend remain plan It to I is the allocation we board our to financial

Vik Kini

Vincente. Thanks,

a IRX QX respectively, of use Moving organic saw segment. performance strong company revenue the of with across growth we strong Total balance execution continue orders operational continued the XX%, and double-digit with with increased performance orders to to in industrial the fueled Slide across markets. eight, and each company QX. be end of commercial XX% pleased and year-over-year by

Given we XXXX. very organic basis X% QX with up are XXXX And think to on to of orders year as impacted how XXXX, a as momentum the by a is performance are X% of representation the compared are comparisons pleased the comparing business better improving. We prior and the quarter-to-date to this respectively, and in impact is COVID. year-to-date materially are we seeing

Our organic QX. setting QX we were move as and growth eclipsing quarter well on and in up both revenue the into company orders records for the us

periods delivering drive year-over-year to the intact, note, conform vehicle operations technology productivity the as synergies Ingersoll not to EBITDA catalyst. as the as margins to relevant segment, or on the to as company to attributable basis EBITDA using quarter $XX million improvement metrics adjusted Rand presentation. do high-pressure restated classified acquisition The segment performance remains of were solution we million specialty cost both second current continue million delivered include commitment year-over-year. point these item industrial Our the a of prior adjusted improvement in XXX which IRX financial discontinued with to of segment One QX, XX.X%, the $XXX and and $XXX synergy initiatives of of

segment for This end, leverage approximately improvement Free both our gross was $XXX $X.X at forward. will in proceeds billion million, $X liquidity quarter We from of total cash takes from received on either from the not X.Xx billion moving as to up QX. flow the report we QX divestitures yielding QX. quarter X.Xx net a

level from revenue orders basis. for The a quarter. the segments we beyond. both for X.XX. of saw company both X.XX book-to-bill expansion. and posted and encouraged P&ST increase the XX% to of the total growth XX% increased IT&S strong strength million strong the of The was double-digit EBITDA orders Slide FX to quarter, which And year-over-year in increased in prior both Turning year year. improvement an prior adjusted organic delivered on improvements and and company saw an We nine, margin adjusted by of an moving the P&ST Overall, XX% strong our EBITDA, versus remain and segments the $XXX QX backlog IT&S adjusted of

targeted investments targeted primarily areas generation $XX demand came quarter costs, as higher growth investments. Finally, costs up like year-over-year million in incentive well strategic and to other at commercial due the as for compensation corporate in

in costs expect QX the corporate level same both QX remain to to at due and comparable drivers. We elevated

the operational CapEx free and by transaction. ongoing a cash to during prudent Turning ops basis and free quarter million included continuing the the $XX cash quarter totaled performance the strong across outflows driven million related capital for Slide XX, to business $XXX million on management. was of working flow $XX the flow

SVT segments. also cash earnings flow in $XX the payments cash HPS of free included and million the related to historical tax profile addition, In

payments in divestitures, tax with the is in these cash attribution complexities cash due operations, As from types flows returns. included in consolidated continuing specific customary to involved are of

impact. million However, our the of the best represents $XX quantification

included continuing Given a EBITDA, better our to we're reported representation cash in a financials flow this From received cash the outflows net provide calling gross tax the we the million adjusted as revenue, X.Xx, leverage business. SVT a shown to basis, and underlying on $XX quarter of ops out the ongoing improvement free perspective, the are are HPS finished including X.Xx the cash divestitures. and proceeds compared adjusted of income both cash flow from and prior which

the would And We to X.Xx. to cash both outflows pay taxes have you account were expect for leverage to if the closer in later QX XXXX. pro divestitures tax these forma, for been to leverage

the the billion right $X.X breakdown now facility. billion On credit stands liquidity, $X.X approximately on of company our total nearly $X of on can based of which side see page, of you availability billion, revolving the at and cash

with have We internal our portfolio strategy organic to investments sheet growth. M&A sustainable to balance drive continue coupled considerable with flexibility transformation

reaffirming have XX% stated already target. is annualized $XXX strong To-date, our cost, of built million been efforts. the we motion, to funnel target. million are Moving continue strong savings delivery million have Due momentum execution, XX, that which we we the or $XXX see synergies slightly than in synergy executed of Slide overall of and on in $XXX approximately stand higher our to excess to cost

As in in a guidance, of delivered million with reminder, XXXX, and which approximately consistent $XXX savings. $XXX approximately target XX% equals we previous our million

XXXX, million in addition, we approximately would total cumulative the to bring which incremental of year. XX% to at $XXX this expect In deliver end of the savings

made XX% most progress across We in the of with the the bottom XXXX. notable to of in shows coming XXXX, up procurement of coming to initiatives as IXV. the by in from the expect The well delivery, with progress as different a XX% material synergy balance areas savings page end the cumulative direct we've $XXX million

of the actions, In savings addition, to into our XXXX. from savings we ramp these expect footprint to see some of we're wave initial and starting

due logistics, side we a year. a we right page, we've proactively coming as to investments, despite one-time in costs is deploy the cost did to and perspective largely the be direct do to IRX basis. of versus and half to implement that discretionary headwinds on and the first entirely of pricing actions as cost This to targeted from of positive On some the on return strategic the and team's continue total side expected the growth seen of expect highlight from material of your want price the well the use

evaluate at the to year. In to although for in the total achieve we the incremental actions half addition, landscape turn we company second over now half levels expansion of of EBITDA the inflation continue test. and are segments. first particularly in the delivered not evaluating pricing the regards second the to with for Overall, adjusted the I potential to year, the Vincente further to discuss same it overall we back margin expect the will

Vicente Reynal

X.XX. up industrial services. XX% And XX, revenue starting Thank technologies to orders book-to-bill were leading of moving and to Slide XX%, with organic Vik. you, up and Overall a

margin EBITDA points up delivered addition, strong margin of EBITDA with In team year-over-year XX.X% of incremental adjusted of XX%. XX% basis and XXX the adjusted

the compressors compressors, further a and we more up XX%, orders rates excess Middle in with orders and XX% provide was split low strong recovery breakdown XX% me for strong free on that Europe was above North regional Starting up up in mid up Let shows performance. products XX%. of America Mainland orders up order detail mid for into low XXX%. with oil America the oil lubricated performed Latin India continued order XX%. in Americas, the both From saw while were the saw East on up in while

and positive XX% execution high ecommerce XXs. mainly improved with across XX% in business was enhanced launches. From global mid orders the the our continues of product low driven high XX% Pacific growth and perspective, rest to basis a Asia blower across on tools with and up of driven lifting, a strong each and continued double-digit perform growth Pacific. were regions. vacuum China so power growth up total in in low orders both Asia by well orders our up XX% And capabilities by new and On

be to right-hand to water side, of we QX of exciting condensed our air is damage. the vapor cooling sold function launch by this easily and with air, result an in a remove can line compressed. equipment we background, moisture the of completed a without we're investments of any of rotary technology. be drive technology compressed used from lubricated our were our oil new it air in air portfolio. of bit air organic refrigerant, compression highlighting the to new air commitment result dryer thus dry and a which continued in the one oil is On the is accessory There's can is causing all In compressed basic refrigerated The which products, the Air portfolio. case, dryer our a as is free

terms quality that and dryness especially of customer. high increases So customers generator of adjacent be that by emissions portfolio a requirement, and technologies case, even in more while doing also over to greenhouse XX%. compressor here developed the the the important the the great helping desiccant technology Rand. serve in our energy Since know provided Aztec, exciting is that in but need demand investments free leveraging Gardner very of a air In and accelerated quality this champion these is order XX% bit new where leverage efficient Rand organic our in not particulate. compression is in we're environment. merger in that reduces by legacy total now even air a dryer only This changed oil This or Ingersoll future, owned we Gardner gas often. to aftermarket The IR, the filters new It company a customers. products technology it great Denver, to more as for Ingersoll which Aztec, Denver have is to was good the is we and we're

solution we which science, momentum business. Moving markets. and Dosatron to digits activity. were strong life up order precision double organic the in QX some up Medical performance science our businesses and water cover technology ARO lab in and broad health in The Slide build in the These overall we XX, by businesses, also and we medical the Revenue saw animal were segment, driven and XX% our orders funnel Haskel organically Mytholmroyd is XX% encouraging, continues have some tough XXXX lines. to saw was and strong as to the comps and up hydrogen which revenue for business serves

which give update team up highlight our basis was margin up are Adjusted we EBITDA PST an the Additionally, XX.X% hydrogen you XX want was million, to EBITDA we strong making. we're adjusted XX%. of on and investments margins year-over-year points with refueling XX to business delivered of incremental Today, where XX%.

As Difficulty] call, QX business. ready unit discussed our developing we're we made in technology pressure dispensing we [Technical earnings a now to before, this have during hydrogen and high in our Haskel investments leveraging

growth. We million next in With five high last call, we will decision two million ongoing funnel fund Xx Since over grow expected to capacity $XX both for also the over refueling our business of the million have meaningful space. product have and the driving line our years to in to to approximately feel this factories of months. $XX expand hydrogen development years sight of this growth in is come, over in in seen that build projects. Europe our confident XX $XXX to our potential we see organic investments where a support next I investment anticipated

the remote highlight state-of-the-art is Ingersoll developing power stations support that In and joint hydrogen to venture. designing Rand want refueling addition, to and clock we the

the Slide and to we're for company's guidance outlook, performance continued increasing XX, given strong QX in Moving XXXX.

vehicle the Seepex technology pressure both and Maximus. of Our as solutions pending as the the segment, acquisition specialty guidance well and excludes high

for $X.XX is digit low single single growth double prior up low growth adjusted across $XX low we're to represents X This segments. our increasing improvement point segments. digit the XXXX high EBITDA approximately double-digit XXX Our billion which range. total, revenue continue And now to growth organic $X.X expected in guidance basis with tailwind, prior to are the across as up we million guidance the both approximately a FX at company reflects basis to up on a mid-teens reported digits guidance. compared was on comprise to to be to in guiding of a of organic the in prior growth of total revenue guidance both organic these from based billion, midpoint XXX assumptions

also includes copper We approximately quarter that QX compared prior guidance side these for also mentioned the highlight million right-hand per as of increased and on the cost of both slide. X to QX the as

cash generation, flow does this And year a to of the be adjusted is with approximately greater XX% be restructuring of the we or expected and balance second free XX% that to year. for include approximately the terms that we recently finally, to to In XXX%. is expect income to cash expect tax the than adjusted of in equal was conversion rate million net in X.X% our rate, plan QX the revenue. remain XX This approximately half a completed, benefits. reflected tax is CapEx

for IRX as employees and will and Moving Rand thank We eagerly as to employees, to Ingersoll all great Rand embrace collaborate. wrap our call, today's role now to Ingersoll solve put each I'm an shareholders. on industry of value you we a leadership be XXXX to how to us in poised position. minded to other seriously, outstanding our be day increased want we transform in that confident and every our to Slide deliver say sustainably for place. leaders together I'd continue there lean take our customers, is a come to XX, we is year problems,

Q&A. up back the with I'll So and open the call to turn operator that, for

Operator

the of proceed [Operator and comes Halloran, Mike question. please Instructions] with Your from first your your question Halloran. Mr. provide line name company

Mike Halloran

I'm with Thanks for Baird. taking question. the

component thinking Focusing and next couple in how you cost how that. on And the the start results does Maybe you quarter price normalization inflation see that some about shortages, over impacting how thoughts that quarters? are the playing pressures, out second like supply that's chains, internally? When equation on materializing? things

Vicente Reynal

We definitely the morning. to half. price see equation be cost to Good in Mike. Even continue here Yes, second positive.

say for As material and you this And inflation up of seeing last earnings, logistics also XXXX have mentioned the on continue focus mitigating we're may the continuing we're the are seen here, is those IXV the we when QX to we a creeping we XXXX. during inflation since I'll With to initiatives. additional inflation were inflation second these increase, that got budget building incremental end acted in expecting heavy on reason XXXX. why actions Since that recall, year, on pricing see half. we focus on to and of direct QX we've which the of the the that, we offsetting that acted of pricing Brexit headwinds with very actions.

we kind a there first I think our these see we compared the of And forward, inflation we and stabilizing in are generally see of with also and of good kind direct is ways do profile to terms a moving we But but to of year material headwind categorize that to and margin daily be continue the the finding working team continued as improve. the to is continued clearly to pressure chain will expect beyond So second to obviously, continue half this we materialize our side, how price I mitigate pressures. half. basis potential in things expect supply then, fruit of cost on consistently model business to logistics ensure increases, while

Mike Halloran

Thanks the follow large obviously for at are good customers this versus sized are What point, in the healthy. up then, trends about that. small the momentum sustainability underlying And saying is, quarter the in you're forward? what reinvigoration, rate? projects what the about saying that And thinking OE maybe as customers are topic? tracking? again, run those are is And CapEx visibility versus How

Vicente Reynal

Mike. Yes,

to improve We orders on to saw that, we some compared the cycle in first that we half. accelerating anything, and saw quarter particularly long what order the continue Nash actually have second kind if Garo large is think businesses, some as to these I And the compressors. we momentum projects. saw of of large

terms customers about kind confident of the more in that's indicator maybe projects. some they're a So good for feeling we're feedback that CapEx seeing large that of releasing of these from and comfortable

And at view, kind news. our in that's so, least good of

of to solid see, building create turn of good momentum funnel here as for this also on obviously hydrogen I networks, We investments some refueling mentioned, some which into that tends good our that business. kind revenue

Operator

next Barclays. Your Julian line Mitchell question comes the with from of

Julian Mitchell

Just wanted months I announced a can to transactions, combined. on parts sort acquisitions. Seepex as it start EBITDA maybe full thinking aggressively year those out And the we first with you made about flow think Seepex from you've within XX number and weren't on of some that the Maximus you're of quite think What chase Maybe that And that. moving roughly clear accretion, also maybe margins, assuming or you there? lay help sort years. us substantially several expecting over up I help of understand, XXXX of you're that should be big move sort

Vicente Reynal

companies grow we two We're Yes, digit acquisitions. into these excited year of really and be next go as see with to look both top-line. continued Julian, And low thanks. double kind pending actually we to ahead

already can we margin precision profile. science As at stated, have the Maximus is technology and

we our as expect, you a margin. as integration. IBM So the already the we expect low of we of below the part deal that would it move IRX have view. the into into Seepex And is and next with we process, this though will be go And can of now launched as XXXX into planning move part and even closing integration of phase Seepex, an kind as initial Seepex XX our

we a far, to we we've meaningful and we it on crack what after solid which cost tend science over pumps code this recurring the So very strong edge see able effective. devices a to launched to that, margins of has don't creating for platform be kind been any of it type be or really where think is highly consider the business precision level, see already market, with through I XX% get what is it's barrier Seepex that to to digital

So a thing we're mean, technology. but we're Seepex, pumps, with a table, product great with IoT here to excited seeing cavity I new brings same with as what Maximus. clearly only also progressive with it not great portfolio And the

Julian Mitchell

And the Thank of in margin you. then, business. sort question base my just dynamics around near-term second

looking less at half Slide out of second margin in I first called you've year-on-year than a So the think XX, half. the increase

understand pretty high still in year-on-year. that, but sort incremental So the look in XXs sort mid of of plus second the implied the completely margins half

to that's make of higher corporate given sort And backdrop price that sure so and of think wanted correct. Just you roughly forth. whether pressures conservative, cost appropriately that's costs,

Vik Kini

this and one. take Julian, that is Vik. Yes, I'll

really and as couple yes, in of of team. second of year distinct actions mean, foremost, terms the we've I left taken mentioned, actually, seen the think page inflationary the So, of by a side I the first some think highlights half I pressures you've of even and the we as and that despite of kind that headwinds seeing, been

is the that's like this. in was quickly, talked the the environment different. say, a pretty team we've kind spoke pricing obviously, proactive take half legacy Gardner actions Denver able to be first about that we year pretty a distinct an measures I'd this pricing First, perspective, of from of particularly to and And nimble having no historically,

of towards some proactive the the So I of of us half well half as pricing think you this measures the first taken the last year, actions between we've saw some year. taking, in of as back

to I $XXX to other XXX% continued committed to side. of cost the And on obviously, this equation keep influx we are still incremental good price the direct then, IXV material on that the particularly we're piece enough, a think expecting some synergies million is, are obviously of that's And allow the positive to the side, now coming delivered from interesting starting year. be to the those really distinct actions us side. see

year. are the headwinds some So we correct that, back are of half inflationary you the those seeing yes, in

we of are as continue those measures We the that helping definitely not the actions to half expansion do obviously, your given to year, of point, as offset some some levels see some to back margin in headwinds. as about. saw the the the that we're productivity as well pricing talking we in EBITDA necessarily the think I believe first headwinds well of half, of corporate albeit at cost

Operator

comes Sprague with Research. line Vertical Your from question of next the Jeff

Jeff Sprague

fall you I of bit side? And more the or M&A confirm also And give just, with. any color that a because on it we're of there's funnel wouldn't I that. primarily really elaborate Vincente, can on, on Hey, passing begin they here imagine the vast built got its in valuation? interested you're PST, would on the theme kind little actually common majority on in been that be on there interesting have to First, the just the what attributes. imagine if would some would you they've

So of you this the you evaluation some as would synergy hoped. was opportunities or found just into of -- were this, have just it dynamic kind you deeper that dug

Vincente Reynal

Jeff. Sure, Yes.

like So is almost I funnel XX% in kind say the of XX:XX.

on see side. more XX% we so ITS, still XX% ITS So good of some the PST, on the kind momentum still here on

but kind say We a and achieved I but that, leader, in see improve. teens we by in describe I will largely highly some prudent will that be mid And margin, ROIC be the of characteristics well. three. by continue that great medium on And companies recognized that path large nature can that and year brands, to good mean, targets to market gross our the size can as seeing also transformational in we will describe nothing right I with them as, to as bolt-on now funnel, they're nature.

on in profiles of of businesses. mean, to against due we themes in But ongoing one of an we -- tend some So, inflated very is I'll how absolutely of cases, future very But yes, screen varies, expectations expectations demand, common passing be deal the valuation which company. our have financial valuation. with disciplined seen of right, focused I of growth thresholding is it And related the kind this say that terms we're and in COVID growth we that in metrics. future of also mind, by to these important you're

of only customer and market of and the we not think solid it commercial speaks work, to at in our a do voice that of understand we including diligence, we I that it's about terms possibilities. interviews, that just So lot trends ensure market process a looking businesses, but lot have

Jeff Sprague

push efficiency? kind ESC, kind just on products willing to we looking really on extent replace equipment rip prove of regular then where separate do actually is as actually retrofit or of of of just across, the their just competition profile replacement you this name to kind of efficiency and kind the the new basis new see going business or question business. really in a functional to think And what about companies energy Or energy offering, product the of, on just of should the unrelated driver, efficiency wondering,

Vicente Reynal

by some Jeff, these Yes, -- we interesting said, at of a have you consumed is will many of when consumed of a the in a that facility, is blower energy the great close see energy goes look blower total I facility. question. retrofitting to say treatment instances that and a XX% before, wastewater because we into at like, it lot a driver, that

the users. technology. in with compressors compressor efficiency to cost perspective just better and mission energy from are it that an old Same highly low when can the high the lot but purchased these So, they you critical, perspective when our of thing put massively than compression a when devices new much it’s you overall product, buy be technology -- process, are

energy sell So value we a when or terms for energy can consumption. our teams, in larger product, in Europe more reduce like increase a that and is continue that after there's of proposition. one we cases, main areas sales and countries propensity the energy want to Asia, much our see in that help what environment this like And efficient say, have, on of customers go replace to even customers the many might well to they drivers, products as having team, commercial train to with as really

Operator

next Research. Your from line comes Wolfe of question Nigel Coe the with

Nigel Coe

Yes.

want for just China, to plus I on growth into So of, reported the all XX compressors as the that 'XX, top into think XQ well. you your I growth dig quarter

So it comp. wasn't easy an

you're you've in there's some maybe trending a that competitor China, a seen what your share one, China, concerns, very in strong market. in So how up then And hardest curious, number obviously, against landing. is

Vicente Reynal

And Denver Hi, are meaningful Gardner overall markets could compressors, hard in that growth lot markets say hit now the vacuum that team done I really have China, when they has the relaunched actually well great really that getting pleased to The very see was ago, seeing about government team pivot a from now. brand big where of team continues where is come. do. in a into That that blower even as has with small also end launches. Nigel. in also recovery market. of they market, a will We're the can the team I some say that China COVID put market. in what year start immediately in our before, to we're it say economy business the good in into some will product really better China the pivoting China end I'll investments. positioned line the and very

the business. Ingersoll a have and Rand growth treatment here we're leveraging even channel with team right low. now blower is show, air team the very and accelerate the we revenue that on vacuum one with that Now market knowledge today the I And, China scale a into larger of in the the example acquisition, that to really

new really in can’t is for of take China. in product team it So a we launch kind as and meaningful line the that launch and dryer China these solutions of that opportunity

traction launching same really is the have getting are time commercially, markets, combination the the what products while that -- So selling end in really good at team of good really we in executing different well, new market.

Nigel Coe

the bucket on that. then are the in million integration. procurement And a supply IR and of great. $XXX synergies chain big that's Thanks, from Obviously, Co

these of that your targeting, bucket? bucket? out are is it's we're chain projects of the as that as inflation of Or now. seeing net some Have that that of supply but industrial pushing some of seen moving $XXX the that they're the inflation within companies chain, the inflation? supply because that some of cost kind And you're of as the chain? peer well, seeing you then kind know, I not some supply to million pressures that in right that the savings Is right? outside or And of well

Vik Kini

frankly. backwards, Probably

your distinct. to second question, of So they're kind start with

but component. we're material much obviously, dollars very synergies of of inflation, total the procurement agenda seeing comprises XXX which committed still the are component billion we direct to yes, big a big, So

balance, would when the able organizations, probably know, no say, it's I frankly, a coming smaller of been before, into we of procurement our different processes would a it. kind have and the you synergies, seeing, Clearly have both it were logistics they've great we've numbers our pressures say job, the that's bit. frankly, as And attention a even their lot a IRX use I'd inflation, as than those to $XXX So constraints But, chain grown able chain inflationary we're seen. distinct. and done of of the messaged to, the about are between think say, be how you clearly, way year, managing lot delivery, well supply markets million really to use managing of and teams I as that, have now general synergy two somewhat and degree supply expectation really, a internal

of material to our seeing more the us, savings, we acceleration expectations? So of any to as out means think No, not us I think seeing a nature that in original here push pleased, mitigate. IXV right bit we've anything any now, of or what I of initiatives at for has a in extremely manner? a given are we're probably looking been dramatic compared context

IXV immune not quite And balanced looking to that I'd synergy things the like I as and think also to, to opening, now, we're we're team mitigants. kind that what's said, up thought. that right But we originally say, more of what equation frankly, we cost at like going initiatives keeping So, on.

Operator

of Research. comes Wertheimer Melius with Your from next question the Rob line

Rob Wertheimer

one on acquisition just a funnel, had I couple Maximus. the questions, is engine it’s on

different obviously, growth quickly. with aspect little from doing the a wanted connectivity vehicle special how the is, And transforming curious, you your one way. a in replace I in may the I'm about a of way. in And or if versus you opportunity, And through and that you at you more you. just think what bit more you do Thank both do deal, whether, than I how and doing just or that smaller the and also IoT, backlog the if about ask some once. base. and So a asset just disappearance it takes installed funnel acquisition find acquisition your meaningful revenue, are IoT way second the whether to large deals long comfort think you're, about

Vicente Reynal

of that the health so good market called animal came And acquisition. in that movement The at sense water, growth and is Maximus of of had well really the is, business phenomenal angle the pumps, creates from flow itself. from in sort a a the kind looking in perspective of that plays that the just by IoT basically different market an Thanks, market, pump find, Yes. Rob. and dosing leading we a Dosatron. agricultural That and non-electrical terms

the grow amount in most specialized and think technology. to we and of those of world feed mean, vegetables kind fast. I about of know And hydroponics. the animals you it's of like available this that really is to kind kind highly the really applications in is continue the applications, shrinking unique can of acreage So rain,

the of So farming which hydroponics more And with indoor and growing leadership here vegetables water. of more use and is you're have moving position. really great way a we to the obviously

mean, small I process, So in was a do a actually way, go large you And Kinney what ecosystem bolt-on how then building Tuthill I and including one mean, are deal, take think controlling themselves also that we we thesis not take entire and and that able incredible effective we facility and smaller the the is into control could that. of very these or to wastewater kind of solution, Maximus it complete And when type I these terms inside in say. the now, entire good argue That but quite of a well. by you comprehensive obviously, is leader that's indoor and a ERP this able in that our now example. and processes agritech utilize the or of deals you in doing see the that a of to markets? plays package. muscle, time farms, whereas pumps, goes Where in integrating pretty goes it a a system that of is bundle together Americas aspects where and can or that that of very replicate much Maximus we rapid lot our some many any of is where of other And all into being of devices the theme of into? that that is right it about markets? with very you or the as it just the get treatment integration IoT great leverage when take end Is entire is these large software deal I say -- could for integrate we're cost- end to super actually deals, way. mean, highly much other as the IRX will that's what excited. use only

also deals in larger we larger give can I So bigger, a a air us know all in come we with deals larger are XXX% sense Yes, of not faster what deals think that that the that, bit scale. but call perfect.

not of businesses from you may from kind businesses. decouple those systems that and those like divest to need you sometimes And

have our that that will accelerate think deals. we we size, continue to about that have bolt-on to be And a how business we acquisitions do medium we in processes our excited funnel. So we continue the

Operator

Goldman of the line Your Ritchie next from Joe Sachs. comes question with

Joe Ritchie

at expansion? Vincente, accretive margin Or a maybe, good types where well? question, really more drive lot that the are of about funnel. utilize, looking acquisitions But IRX uppers like as can margin thinking a just talked system you're quick we've of for balance you opportunities, there M&A better a you the fixer is type to Hey, looking kind as the know of of I kind you're through

Vicente Reynal

of for kind the Seepex makes Ingersoll That even Joe, Maximus make good we're a top-line we a strategic and think future continue businesses a portfolio. a greater great for expansion deals the to great Rand great, being than and growth improve, product that to be think And has the to I how margin raise two, technology that company, sense look Maximus looking at from to double-digit at I room drawing but the example, but to value that, continue also making Seepex it businesses to company profile lot lot be technologies. of already of are like. of company. by science. it's our precision that, a can what bigger for say has company. Rand Ingersoll in sense and of of No, -- margin would I of that sense growth, we to great a are the bar

we expansion company So better. but I important, make and more that margin just kind that just we one at it's in is cases, some think the both, look generate of it's not of those the the total can size,

we So can see continue to multiple in business. accretion an overall

Joe Ritchie

think call next, about, point. the way If to that's guess for up year of the don’t guys and you this Got that the up to play of take actually like follow XXX to kind on order cycle company. side more converge total And you I of this be on months? were over trends revenue, at why at the about versus thinking the bucks, to even have half your I question, look work book-to-bill first just booking going my of helpful at, million the is how X.XX your revenue context. referenced maybe kind think XX or XX I like I you're order it. think earlier, catch mid And about forward, That's kind rates, a you're you revenue type with orders it

Vik Kini

I'll take Vik. is that This Joe. one. Yes,

with yes, all orders been I of first pleased I we've always think mean, performance. is So, the really

the of those tailwind seen regions. some size, the be which, the whether six five, talked yes, we've vacuum quarter in type think business. booking second kind kind But a we typically in compressor thing saw nice whether the here that a we'll not months compressor you're out what good call -- about kind core within quarter, good Vincente actually of larger out the also project that side, blower Nash centrifugal we've of Garo of the that'd of I ship in and thereafter, mix mentioned, most for be orders, typically next

the than say, to kind certain time. tend to those I'd types six that of XX, So cases kind to that have are even longer order sale lead in of orders of

a is, news So balance. here the a good seen bit we've of

and context stronger also across orders, some QX the into now of most up, And business. obviously, that nice, orders this point we digits in to coming here call strong think is, to strong have visibility them, in any yes, are in I backlogs time, we revenue. portfolio. pretty we've good had the much have we quarter really the Yes, and news backlog we in, of in double the parts certain at today kind than of frankly, But we've visibility longer a even taken XXXX. as better would of have backlog extended more probably even recycle

than over So XXXX had, giving us bit last we even a little the visibility more frankly, months. into course of few

a good both balance the I Joe. of So think answer we're seeing is

Operator

question the next of Mittermaier UBS. comes Markus from Your line with

Markus Mittermaier

that up question. follow just I Maybe on

then for sense that of use three get inflection? something I [indiscernible] Gardner in context CapEx now, of to at at much next a in sort point businesses in by Denver, to companies cycle, growth you top that what sector, trying among long a XX, the the are cycle the much et the in top mentioned just a they of that of the that around framework, terms look actually CapEx. cycle two, just we pro but the interesting the cycle, years, industrial how Is cycle, the see assume in similar short the of that last there, in industry is at growth both is we the business for pretty that short if So CapEx as and spending size XX, look are forma of cycle XX, at from sort cetera, driven and these maybe nature cycle long short if should

Vicente Reynal

Marcus. Hey,

CapEx optimism probably of are getting that, market, and kind kind that and good we -- started our a to just is think of getting more broad released. more, what get I this think base least, to that's analogy, here the see to in at see

the that's yes, you of same that could to expect argue type see. momentum kind so we And of

Markus Mittermaier

Great. And then, quick hydrogen. on maybe just a up follow

And funnel, four a that looks for how XXXX? If how You've think fragmented market five ultimately, sort you that do you or XXX X.X that the funnel? about is we of think the mentioned, conversion years that market? that road? on should billion like, down at look timing opportunity of million three, What

Vicente Reynal

Yes.

in there that terms In not is, the actually players the dispensing many fragmentation of market.

You that players could they're us three argue them. top kind of one main like of with being

specialized of way these have Haskel this for point we mean, expansion the that. dispensing is Haskel used funnel, with on such these see that this the do and of you see years. history from a a are it of ago. because for of be they I of time, increase of and So to type of specialized one decades to think rocket And I dispensing doing the mean that has of to of seeing is lot in equipment. over project-to-project. a the many thing good lot gas, of horizon types million varies momentum And on networks. back it case, in in But And I leading projects at I to many, funnel highly these is it continued get next providers ships, hydrogen, terms do these XXX that mean,

Vik Kini

that we out XX next meaningful And funnel. expect to headed, to able I the that's that the spend large and that, our given driving, the of to in obviously, build the $XX million with part would a that expectation frankly, we on funnel add technology execute Markus, meant over given announced, be or is investment where a that part really to so to months, that's here, capacity

coming higher and XX up plant So to I be months. in of growth the here that in quite going And we're invest -- one. seeing expansions organic think to growth Europe areas, excited the reacting. funnel a this we're quite going are couple about And the being of said, we're in big continue explicitly, kind a we're next we to those always

Operator

Your line of Walsh a final Suisse. comes Credit John from question with

John Walsh

from question you free if one just talk was you're about year? build a Could the Thank means us a or than bit thinking of back how little I you're bit very Good greater It strong some help know there's cash don't second you. type the morning. about XXX half you dial in about me. little of bridge conversion in could talk usually flow obviously, because weighted. half maybe what on and

Vik Kini

exactly John, you're Yes, right.

to to be factors. that free comes say I the of front revenue the orders. side little as equation a second pretty the the frankly and in seasonal capital profile you've -- I in tend probably weighted, quite where, One earnings years, year probably couple seasonally different in half more prudently, the weighted year, tends frankly, a side cash no a path. numbers, think that half from for of one, lot you second of business some most the our kind more build just is half context inventory is exception be positioned, here seen of have flow of seen working would typically the half execution of second a a the earnings in the can back -- we This also tends end bit does to that equation will back see be bit profile, of of the follow the

working for back year two tailwind tax the hard the overall on to kind expect see contributors. of one XXXX cash the would you the the expect rate, would there position the good tax tell well. moving in that on we And continuously capital we do tends I as nice rate see continue momentum into so, and we a half of say, we're I company the that, that biggest to the be, steadily tax to working would the of also really and on to

at So that different and we're think pulling. there's we're levers multiple I looking

what saw environment expect to terms I dissimilar deploying But, year, of year. the in in again, being too half prudent see a second not cash. continued we'd to strong we're last of you think very this

Operator

This continues for the Vicente call question-and-answer session. I'll now remarks. over Reynal to closing the turn

Vicente Reynal

to to to again of Thank company also the your And the you say investors I investors forward thanks all listening want appreciate many participate next to here that more so all you and of work the much. I in I to just hard and are employees time, [indiscernible]. days potential all call. interest one that you thank over and have weeks. to the speaking the Thank look you. our of and

Operator

Thank for participating. call. This today's you conference Thank concludes you.

You may now disconnect.

Ingersoll Rand (IR) 29 Jul 212021 Q2 Earnings call transcript