IR - Earnings call transcript Q4 2021

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Operator

00:06 Hello all, and a warm welcome to the Ingersoll Rand 2021 Fourth Quarter and Full-Year Earnings Call. My name is Lithia and I'll be your operator today. [Operator Instructions] 00:23 It's my pleasure to now hand you over to our host, Chris Miorin, Vice President of Investor Relations at Ingersoll Rand. Please go ahead when you're ready.

Chris Miorin

00:33 Thank you and welcome to the Ingersoll Rand 2021 fourth quarter and full-year earnings call. President Relations. Vice Miorin, Chris of Investor I'm And and Financial CEO; this morning Officer. Reynal, Chairman are Vicente and joining me Vik Kini, Chief will Investor Relations We yesterday of our call, release earnings section are reference www.irco.com. we both the issued the these on and available website during our and presentation

refer conjunction are conference previous in replay the Please measures. which on our to on remind details. available remarks, filings, everyone subject certain you will statements later to SEC forward-looking nature I will today. addition, uncertainties addition, the a call provided start, should Slide to In XX:XX call. certain read this call non-GAAP In in want for forward-looking are this more today's XX:XX and of this and with in risks be financial Before we on the X that statements information in review we discussed

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

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

Vicente Reynal

solidified sustainable growth mission creation on as X, year Ingersoll accomplishments portfolio and for critical XX:XX our records. and many markets. Thank good pivotal on our high a technologies focus story you, XXXX Rand was everyone. compounding and growth flow reshaped to We slide end Chris, we to morning with Starting new

appreciated to day Talent our acquirer like grant employees because as value, from another creation million shares that yet to in effectiveness at end earnings employees each also score a us services choice. and new commercial we employee grow. they fourth XXXX of think over new million We time. be of their motivating positions a factor I execution backlog quarter of XX:XX that process and to results by make benefit who over the and engagement Deploy accomplishments compound shares us largest designed have or considered for establishing decisions via some consistently employees can of was the to where an to to continued our a strong ultimately plan shows each enable base our the implemented are, employee employer engaged enabling XX:XX the our strategic capital IRX demand Our our the owners, employees of to strong want wealth. In XX:XX team, acquisitions, slide XX% up to yielded granted in value joined years our operational continue $XXX today over $XXX Rand X to imperatives ownership. Ingersoll While to X driven moment as to ever Moving strategy in allocation the to across of forward, our very products our well a take Furthermore, personal also us recognize XXXX. last for and continues the power

XXXX, EBITDA XXXX Margins, XXX in points of points engagement in have we In of in current quartile Our organization. basis top include the margin Expand score improvement XXX now an ranked adjusted manufacturing improved the alone. company's basis

received our including multitude progress of year. growth merger unique we in to from rating realized growth Investor drive accelerate Global the from outlined the $XXX million growth past additional our to performance continue IR enablers million recognition expected S&P how of in It XXXX. out ESG terribly, commitment and We have power XX:XX synergies we the in agencies, $XX make and demonstrating an with a leverage the million of operates during have $XXX contributed MSCI. Once across Day IRX In XXXX again strongly initiatives. to

XX:XX generates to up times XXX% generation Solutions. XXXX. proceeds initiated in secured quarterly without Slide more qualified and strategy associated X X. $XXX assets engine the share in new to proud it increased leads billion share we were slide expected accomplishment XXXX. allocate outlined enabled program compared per capital strategy commitment. our million on marketing how team. are IIoT our XXXX Our year-over-year We're innovation at $X product have now results. approximately effectively, dedication We during we demand $X.XX XX% also and Day million over of Turning to gross the the from of over quarter. KKR’s shares which the Investor equity executing the This delivering repurchase the we billion final not are X% will Car it fourth as in incredibly annualized. our High part acquisitions XXXX And committed of to of a and We sale, Club and of sales in already new represents dividend repurchased divestitures deployed $XXX done that confident $X XXXX, produce Pressure when a could of and we and XX:XX established outlines We're

digitalization, capitalize of to trends, Our quality portfolio mega is and global life. as now sustainability on positioned such

basis supply us from cash in Slide operating XX% of margins strong we way margin and leverage aftermarket outperformed year, with through productivity which And Our XXX X% improvement basis high XXXX, on we're technology coupled delivering XXXX. growth target, delivered growth our in the XX:XX And enable high performance XXX When pricing, our several we through differentiator expect culture we chain from capturing margin and digit of of see, support you growth competitive achieved incremental margin enablers to With of growth. company commitment and M&A total each IRX Management a strong margin since execution. to year-over-year this goal expansion, have inflationary our earnings our year we week, with to XX% or expect we the pressures. our to -- we mid-single in flow digit organic XXXX across our XX:XX to as M&A with quality points can across we company deliver organic this cash annual an in free points and organic initiatives per Turning in expected iXV on investments, double by XXXX, growth over period. We leverage as deliver on free XXXX. generate year teens. double-digit annualized. of and encourages feel X% adjusted over-delivered like constraints as And our XXXX. growth grew strong IDMs each improvement that to in mid-single compounds digits X, EPS And These that XXXX, consistently low flow high and continue by and premier XX%. being achieve well Daily Impact XXX despite challenges portfolio. over

improved margins capture basis segment, company, XXX XXXX despite the inflationary XXXX COVID supply at basis In persistent and an Looking points the to XXX we from since impressive ITS impact execute and and improved as points synergy the ITS basis in the Incremental accelerate IR high from continue productivity pressures. 'XXs time. PST chain have excluding on XXX points In operating M&A. segment enable XXXX basis should value and creation XXX achieve in margins expanded to and leverage we points, merger. margins the over opportunities

premium coupled yield onboard the strong with diligent in 'XXs important flow base remain critical should of ability as with mid acquisitions positive. as to products EBITDA the the to XX:XX margins business to we brands and and synergy last reliability PST cost Continued over the and price nature execution bullet It the we note that we're our we highlight adjusted on mission time. point, high is quality due through in have

months in that Ingersoll its to inflationary XXXX. and top our in A and in even And XXXX. Slide expect Assessment ago to industry in Global Annual during is just progress which now leader that for in its have each to scored the excited progress S&P we Rand’s in an in ESG. sustainability included the second announce on is past as few Moving an X. was weeks these a the We We're accomplished Rand another XX:XX times the receive upgrade same do since have the validation XX Based these recent rating. demonstrated thrilled Sustainability announce to Ingersoll from I'm merger yearbook and released really quarter MSCI, XX% upgrade the of

XX:XX S&P Global top getting started growth. in incredibly our of Global an are sector. recognize team will given committed to or achieving to year each very a already now performance. on and we And of to by ESG XX:XX selected believe XX% Vik just on agrees ESG X is proud Industry update cost its in to our we the in for companies us addition, journey. over it on journey with years. our sector financial early the each industrial of the one These rating our towards ESG. being March and we this progress Despite the sustainability I we're that Mover S&P top in recognitions achieved agencies In on turn yearbook accelerating our quartile XXXX as is ESG company in recognized presentation performing which QX I'm year. we're this In have goal focused recognizes progress, are industry provide company becoming Award, which unwavering improved to the the commitment the most exemplify our of to

Vik Kini

XX:XX Thanks, Vicente.

delivered a growth of were deliver and to $XXX million, adjusted and year-over-year a year. account encouraged Total times, XX% for are Turning setting XX:XX time cost have billion environment. across strong a be the quarter to performance The million supply leverage record to was improvement. at eclipsing up end orders in on saw up free out company and on chain X. year-over-year QX synergies XXXX. $X.X Moving the Our fueled X.X XX:XX of to organic the operational and XXXX sequential Total X.X million prior a double-digit IRX continue quarter margin and realized improvement $XXX takes a of as orders a liquidity million by each in our by X, $XXX persistent to from EBITDA for our XX.X%, slide. to orders strong in a basis Adjusted execution driven cash into point of which XXXX. quarter on by we Slide the respectively, balance the segment, for unique QX, from company and increased was XX% commitment. commercial of $XXX fourth adjusted in well us company, million quarter flow inflationary approximately Slide pressures taking the track XX $XXX net comparisons improvement revenue we QX company challenging year. XX% and Through prior strong overcome EBITDA after revenue despite the items to This pointed QX

both XX%, of and the our strength XXX PST basis. increased which an ITS revenue M&A completed in and down margin segment by while costs margin year-over-year, XX% M&A. prior over by XX% QX a million the posted adjusted and X% compensation margin came declined savings $XX FX XXXX. we points, by corporate grew primarily is orders strong the XX driven of adjusted of incentive end basis from the basis basis the over the points. Total company costs When on to for end from declined adjusted X.XX prudency. due XX% XX:XX book-to-bill XXXX, encouraged QX and quarter, XXX in quarter. impact of EBITDA general Finally, backlog, declined from up company lower segment of total the at for the to For Overall largely remain exclude We year. points, the increased PST of impact

some most benefited our manage the with driven divestitures cost corporate came share. Off XX% quarter to restructuring expect year by to efforts at earlier EPS notably note, cash in to XXXX. XX% specifically Adjusted of in full the X% the tax for our We low the XXXX. to ongoing year. $X.XX the for completed per tax associated and the taxes from and millions adjusted SVT the 'XXs rate for normalize quarter efforts, per back and was minimize QX up quarter impacts non-recurring in HPS

year the look increased non-repeat some the grew to on low XXX XXXX. X.X company margin year we basis, XXX basis. basis XX:XX the the slide. margins excluding XX% basis rate and quarter $X million or cash to book-to-bill orders XX% adjusted stand due PST M&A. XX%, adjusted XXXX, by points we be continuing and points. a XX% XX. On to to XXs XXXX up CapEx the at the driven to ops continuing Slide Turning operational FX XX% in ahead the next quarter strong adjusted incremental these XX discrete back to As impact completed declining an PST of full and from free on basis EBITDA by expect in impact revenue both by with and by basis total during of basis, to a posted million million organically. PST When flow up items. of included increased acquisitions $XX invest business, IR full was totaled was of XX for on was flow margins these of of Margin the expanded performance ITS XX:XX Moving to points. the XX%, related exclude the points across ITS costs synergy up and The $XXX cash merger. while Free with

the HPS inflow $X net SVT million addition, taxes cash to of the related segments. cash in included In divestitures and flow of free a

$X.X $XXX for versus was X.X based quarter. flow $X quarter times billion first And million year. $XXX credit and the approximately prior on X.X facility. the was million towards now $XXX these billion cash strategic million dividend. was in stands by revolving at liquidity of $X of the of times, adjusted million our in and Excluding included billion the quarterly on which free Leverage total company improvement fund which items, $X.X outflows increased M&A quarter, over XX:XX cash to availability an Liquidity our

slide active, remains some are delivery approach. funnel to IR Moving the robust up our on of disciplined on and excess remaining in like an synergy We'd and merger times impact provide and M&A cost. of versus X the price update XX:XX close details Our the of in from we XX. to

situation. aggregate page stand-up million as $XXX of to achieve how This an commitment proud spent well generates from $XXX our ownership the cash overdrive investments estimates. synergy are regardless original of dollar now new think or to our profit very of to the speaks from left $XXX the a to about the returns every like everyone always thinking on million employee XX% heavily with how and to roughly focused the the the the an our of we On of they continues merger, updating cost are combined we on million company high million, related I'm XX:XX as performance, associated improvement. $XXX reduction culture owner, IR

XXXX, incremental environment our particularly IR able achieve as quarter difficult environments. this Looking each we $XX expect to $XX $XXX as initiatives. in logistics In and remains total IRX our leverage price on as in to XXXX. highlights we material offset inflationary of margin quarter approach margin remain will chain strong to and price the in mostly remain expect forward commercial the same not of XXXX. QX, to highlights for is the provide with the company we in to each execution, In was and What XXXX of The and million continue actions. to while addition of labor result synergies XX is execution challenges. million $XXX The an labor cost In internal sequential the Note direct synergy and in realized XX% basis productivity XX:XX dynamic. XXXX and synergy status to inflation, team price funnel end that of right million but points. updates side positive or even in proud we to incremental slide including productivity of despite the of date, as improvement IRX don't and materially are commitment deliver related resilience we cost merger cost supply that, I'm in the we the million XX:XX calculating ongoing very positive an cost delivered expect drive most we direct labor we synergy This we we excess change a look we ahead, periodic to pressures expect delivery.

is on but in for very inflationary be challenged most approximately profile XXXX, EBITDA to basis, be be from continued well the a the total quarterly QX of nonetheless, and segments. do prior in top of call Vicente year-over-year I expect margins XX:XX Given performance. the turn phasing. line the speaks know team of We commitment easy, be of comparison back to year the discuss to now quartile to will pressures it but with our differentiated the period expect this in year incremental tough not just and XX% quarterly QX to we our a be

Vicente Reynal

incremental team XX:XX EBITDA segment, organic Thank XX%. delivered which you, The of points was Vik. XX, Slide And EBITDA, year-over-year up turning XX.X%, sequentially and Service an adjusted strong adjusted in up an with rose XX%. Industrial Technologies our margin margin XX XX% and basis to of revenue

a As point QX from are margin XXXX overcoming expansion. very strong comp of basis reminder, XXX a we

XX% However, on X-year Organic low point XX:XX oil 'XXs. The orders has Middle was over while while further up teens, compressors, were saw that the India Americas growing at at well low-single America orders with important basis strong breakdown high growing America XX%. for Latin up clip digit. Starting products orders to in up the highlight orders and Mainland and in improvement. oil-free East XXX XX% a as delivered mid-XXs, In margin products team performance shows lubricated delivered over with XX%. were and a up orders Europe, team the we high down up North were

In high-teens a XX% line, to perform very approximately well XX:XX Asia approximately with continues rest the up across were Asia growth XX% the of orders in driven blower of on Pacific and global basis. vacuum product orders China and by growth low Pacific. XX%

our and sustainable execution innovation enhanced product lifting, new the driven Moving On in total approximately e-commerce today action, and positive saw we our and up orders complementary capabilities were with launches. orders by drains, very as separators tools acquisition as XX% we Jorc performance for products, their recycling company. water have on and due the XX:XX tough customers efficiency to Revenue and Science up improved the grew and segment helps We're and manufacturer well business XX. power mainly will scale of next given we XXXX momentum, Jorc which to achieve products air in medical recently improving compressor creating expand energy a on COVID condensate environmental our the Precision compressor revenue goals. our to highlight to related part Technologies of and and use impact through These that the QX Slide encouraging acquired of comps for efficient as expand Moving of system business. which in these XX% organically, is geographically. focus air, oil excited are remains which as ecosystem, the the to about want offerings and overall the continue saving continued ecosystem. and fluids our

impact first up Additionally, reported the $XX of orders organic adjusted year-over-year, strong excluding segment water Dosatron quarter margins animal sustainable year-over-year. well business recent we're impact as lab, coupled and this used up driven XX:XX D we EBITDA by XX:XX complementary and Adjusted which Tuthill’s markets, well XX% slide, businesses, sustainable piston such water PS innovation is Pumps XX% markets. M&A. to underway they life of as margin sciences, XX. highlighting and to of up serve Moving Medical pumps to and magnetically and the X% as action XX% team XX% existing are and adjusted aggregate, other business. end XX.X% analyzers. we half are series the food at the by to XXX when XX% Pumps XX% gear wastewater. double Overall, which of analysis, Looking manufacturers down the in basis digits the excluding XX%, acquisitions pumps expect XXXX points, chemistry million, XX%. The basis M&A. to in lab, hematology of revenue Tuthill health was beverage, as well as Tuthill to were and portfolio, end medical our XXX were with up were margin our in to half Slide an applications acquisition. guidance. of driven Incremental and up portion such our in the EBITDA XX% with Again, for lab was In as XXXX points and company up be We're ex-M&A. impact QX total the EBITDA the second delivered XX.X%, was with down the primarily pleased and of the integration introduce

to in a X% X% to X% growth This with and announced the revenue to an We company QX is of to in expected and in quarter. to closed quarterly million seasonality of X% and in and with contribute both FX absolute X% M&A typically X% the in normal headwind phasing X% in half be to not fourth expected QX, half. business, growth of the reflects XXXX coming to and $XXX from approximately in incremental date We basis revenue. expect the outlook in first X% for the in similarly organic expected an is is total strongest X% to XXXX. second do PST. XX% X% contribute ITS which QX lightest growth to on different stronger see materially

earlier organically margin adjusted sequentially income for rate approximately billion corporate tax from CapEx we to company expect Free expected mentioned is greater our QX revenue ITS year-over-year single-digits than expect anticipate margin revenue. reasons We to total representing cash to with to growing for evenly adjusted expansion with approximately XXX%. low XXXX. X% low Looking spread approximately in and XX:XX high growing conversion normalize Vik to growth double EBITDA net at of QX incremental double-digit the be $X.XXX PST through XX:XX This adjusted with flow digits. of 'XXs the total for specifically, be including positive the quarter. $XXX of expected yields million each company over cost of to $X.XXX an QX XX% billion, We the

tough flat chain XX. comparison, to Turning due Slide inflationary to also constraints to pressures. expansion expect margin XX:XX year-over-year and supply We the slightly ongoing positive

for to our want is the Rand As year XXXX be we relentless We problems even your To oriented that an I we challenging execute wrap to to efforts a incredible you an environment. today's XXXX. into to employees, as outstanding and tough team. despite solve up call, move accomplished in amount in together position. Ingersoll again and poised XXXX strong an is I reiterate thank action want stronger

to and efficiencies and with acting IRX earnings our strategy, on market serving we boldly as driving focused capital the allocation for inorganically and to for every and quality language, outperformance. Q&A. total our win growth, in very the significant process to operator our speaking record increase marketplace. innovation industry-leading enabling to of on a truly XX:XX an call open invest is comprehensive outperformance turn and continue strong both company. our is backbone ensuring in team sustainable compound to growth while that, opportunities and capturing We focus of capital continue our and have organically back I'll company, portfolio, Our the drives With and global one XX:XX ability balance sheet with is our redeploy and the discipline track in

Operator

Mike from Instructions] today of Baird. comes question Thank Our [Operator you. first Halloran XX:XX

Please is go Your open. line ahead.

Mike Halloran

good everyone. Hey, XX:XX morning

Vicente Reynal

XX:XX Good morning, Mike.

Vik Kini

XX:XX Good morning.

Mike Halloran

associated in the that? reduction synergies, First pretty reduction It's maybe sizable XX% XX:XX on roughly behind here. costs with a what's just

pieces so just the moving like And there.

Vicente Reynal

Yeah. XX:XX

we Mike speaks power our on of mentioned that I the for money. that always it spend return on about have we every to and think as of that approach the project speaks to kind at money mindset look this we the these also to used how ownership the that of investment I meticulous really mean cares everyone remarks, we

kind effective one-time these use able the the of charge So of cash efficient and on of the be to been synergies. we've for very very creating

Mike Halloran

you numbers And really as do other far look extending challenges, maybe backlog of does are year or to work get the the One, to phasing, a things. normalization? normalize that the guidance couple the backlog The second, backlog as robust, assumes what XX:XX kind talk you you kind as of backlog the how plus underlying start of obviously demand sustainability underlying demand? through of when some

Vicente Reynal

XX:XX Yeah, Mike.

eventually see we I would broad market to growth that that, say while in of strong have show will ability good trends that our short into products seeing be cycle the very our and what end ability be new some to very based, is tough capture might to In we some comps to pivot been is be seeing terms what we actually sustainability, utilizing are clearly continues able and might our market. the on any the

that it of -- we're looking customers be I asking think excited to with you able would to new the we're we're in technology life about they projects to by can drug and X now we've of seeing that trends seeing sustainability the CapEx that increase of It's that. we of quality is and of customers I efficiency. And a of the that, pharma spoke starting to really seeing for that, reductions to to around cost do what been total expect say, we CapEx a driving higher pleased to do see we're capacity IoT in I'll to supply related a that make lot compressors we're projects lot cycle chain, seeing products level technology of for it's release. how continue are discovery those in the for lot And So their also really of kind in upgrading starting in actually past more that very due Investor new get XX:XX so discovery, example, like related also the or to also X. mega-trends we re-align of to where terms and widely used addition we're get about Scope but the Day. kind ownership what able recent and tell of in expansion the benefit. capable

Mike Halloran

time. the Great. XX:XX appreciate We

Vicente Reynal

Mike. XX:XX Thanks

Operator

XX:XX Thank you.

Josh of open. Pokrzywinski from comes Stanley. today Josh, line question Morgan next is Our your

Josh Pokrzywinski

hear you me? morning Can guys. good Hey, XX:XX

Vicente Reynal

you, XX:XX Yeah. Josh, Josh. good morning. We don't hear

Operator

Josh. Hi, XX:XX

Your line is open.

Josh Pokrzywinski

me. XX:XX Can hear you guys

Vicente Reynal

can now. We you hear XX:XX Yeah.

Vik Kini

We hear can Josh. XX:XX you

Josh Pokrzywinski

Great. Yeah. XX:XX

about Sorry that.

a think X.XX-ish you be on from small Mike’s maybe Maybe some through should we businesses sequential on to of sustainability noticed backlog way numbers memory an some if serves, book put about like normal of how but different think you perspective, do these the had year? in a of my down kind we bill here? bill about just that a step kind book to So those the orders of kind how question as go ITS, type follow-up I phasing. of the will orders, in seasonally,

Vik Kini

XX:XX Yeah. Josh, well. maybe as Vicente I'll start add let and in

with terms patterns momentum really continue absolute see. we're think the I to of we've in pleased the order

the is think year is see think the little we becomes kind half kind half of lot X more the year. bill to typically bit in the back at typical through and the This where which above typically typically of businesses, year, the in and back sell If business sell-through to the or first largely attributable below then that into typically book of the project you X a some towards of seasonality of about of the business. of a half larger a second type

have obviously just strength continued the X able we in bill to overall book obviously to in underlying quarter to sustain the the fourth above So been speaks demand environment. clearly

the the or below probably presumably would think year. -- start to expect in but to think the half did expect here more chains book as I out the being to of then to continue front to half we'd XXXX, of seasonality is of half above we at the book turn dramatically think as think the the year, change, we as particularly see calendar again of don't year the seasonality be would in back X slightly kind to X bill typical again, to I the to bill to I expect see we supply typical back we healthy, latter normalize, expectation return obviously a

Josh Pokrzywinski

guys healthy Got then price carrying amount the helpful. That's think as pricing decent you are well. we should year into XX:XX in that it. about guide, probably of backlog in how presumably the And environment,

Vicente Reynal

Yeah, to pricing price of kind that, think increase the the average for XX:XX right, Josh. mean, year, growth second to than you the about and maybe is phasing, organic from actions and full when way the the in to half year of we half. think at about I look think first half coming the organic that's about it continue the the growth, less the of as in on half continue take the slightly we

Josh Pokrzywinski

That’s detail. the Appreciate Great. guys. XX:XX all

Vicente Reynal

XX:XX Thanks.

Operator

Partners. Please Vertical voice Jeff. of go Sprague Jeff from ahead, comes today question next Our XX:XX

is Your line open.

Jeff Sprague

Good Thank XX:XX you. morning, everyone.

Vicente Reynal

Good XX:XX morning, Jeff.

Jeff Sprague

actually some on cost, context on is cost XXXX. fact for impact coming price us embedded get to the maybe that us impressive. understanding in true dollars up you're better price maybe your the algebra in of speak love speak but that. you just guide laying or kind guide back inflation margin it the here of case of basis? incremental out in to on give so you're rate on quite in just what's nicely a Just a XX:XX incentive the price and to cost Can either suggest XXXX positive is would to way, It

Vik Kini

is this let XX:XX Yeah. I'll add. Vik. Maybe Jeff, start again Vicente and

price So segment. be perspective, just each said. expect XX% Vicente approximately Obviously for of guide to do we reiterate to from organic what our the growth

you speak, price quarter, XXXX. in a just dollar perspective we basis on like just we of from each to XXXX terms in quarter XXXX, year you we're then of pricing positive expect saw were actual more actions as right, In move the frankly, a kind think just the more cost as let's we and of reminder, should a a dollar environment. -- price that's Yes, quarter. as and quite It's we again, And we price that of the in the much then spread be then XX:XX based and and quite way of than half in call about the obviously are XXXX. positive So on, each QX so it tighter a little obviously, given absolutely QX in through the taking cost. then improving of the lower some just obviously it, continued, first

get of actual little based on about again, with better XX:XX probably we regards then the And to spread those price dollars. kind or the in think will then from a move think terms through bit to the dissimilar QX of pricing to cost specifically perspective, way a equation that be about some as think of XXXX, the actions. year, in tightest too that we And obviously, sense expect probably not would it's I inflation. we as inflation that

to is saw material half we kind consistent. XXXX. half, freight because not it not What good chain manage that, to in be of started and that of we say is the we XX:XX think be in tapering inflation to Labor, really XXXX worth we've even clearly of through or is slight address equation. the equation necessarily on on the of we situation forecasting but half piece logistics. labor I And back saw XXXX. to just inflation the coming the inflation improvements would of the line improvements cost merit It be expect it, right we're But we to in tell again, and of in the the now way to out some in in that easiest largely rates huge price material in teams the some it so expect levels slight see productivity. you maybe we though some supply very noting, biggest second piece to then it's offset with first the

Jeff Sprague

for the big their color. size been of here nature really funnel Russia and to kind just impact whole maybe today. in the Vicente, outlook change dislocation the or valuation comments again of but point. it multiples on this Obviously, year-to-date M&A wondering thanks the is there the that that on at XX:XX this situation market expecting Great, and are on of the see today a this like. in has obviously the Any in of that, and early dialog? And environment sellers actionability pipeline too about including the Any

Vicente Reynal

that slightly -- in they to are starting of broadly, maybe were some some I to expectations case would as instances we were on not companies early kind bit No, I that mean the come Jeff, aggressively maybe a of little Yeah. the perhaps that it’s multiples a on definitely although on revenue that one-time that XX:XX as or of COVID down tell, case-by-case kind say a happen materializing too see kind counting to but continue to is of basis expecting.

terms getting work that's large, the disciplined funnel and of very we're active, is So us engagement has that for conversation, door to very, have we very and a in I based we're that we're getting highly that having our they different the opened news companies you know done unique think very of and of we continue and in the good on because be family-owned a ownership lot lot doors sense around the I proposition tell mindset. opening can been unique. employee that of

conversations to To in M&A are locked as to is that kind very or market better so owners executed entices think And like get when maybe volatility that more your active. some this process the situation a visibility is the there have of things point, want I in. maybe faster some mean I get

very I is that's to on point, you your the strong. And so think piece. we're exciting funnel active And as this, saw, the Jeff. And very

Jeff Sprague

Great. you. Thank XX:XX

Operator

Our XX:XX Deutsche DeBlase ahead. Bank. from Nicole of question go next comes Please

Nicole DeBlase

Good guys. thanks. Yeah, XX:XX morning

Vicente Reynal

morning. Good XX:XX

Nicole DeBlase

that going target Can to around we a year I like through little guess, throughout EBITDA driver progression XX:XX progressive margins if of Can which the Good drive would of and year-on-year the in morning. margin improvement we're away, the bit starting about flattish, EBITDA takes conviction just walk full-year kind the the just assume, cost. M&A dilution that? the we Like price to margins the talk key getting year. puts

Vicente Reynal

XX:XX Nicole. Absolutely,

first very look in to off, both Let adjusted say, company terms that. comparable to XXXX. for we take total and a seasonality, expect I'll of in the facing revenue saw EBITDA me we stab what at

compared performance on maybe you to or you we're adjusted that and a stick extremely of anything based I’m of points big that, of XXXX Although QX XXXX for kind in say, will in in where not half first I'll a then first effect and easier the split, expansion XXX more from actions of a terms in our some color ITS second as may point, basis. going margin And and of forecast historical QX And bit you are said, EBITDA I ’XX. hockey year-over-year first, points backlog basis expecting the to your give XXX ‘XX current basis challenging, phasing half that another perspective more to year. nature give on to was than I to half say of recall comps in

in products. So measures in the And materialize synergy of continue year-over-year in And the were we cost legacy we accelerating. inflationary spread, SEEPEX pressures margins the price being so to spread. And in half proactive then things mentioned the into sequentially should but --this in now execute as PST IR half tougher of XXXX on of think the and those quarter progress expansion back compressor of of first really the cost now comps of year. the of any second had in do addition, XXXX in synergies about for we towards kind the more you and XXXX, majority what the price the that half of particularly of the M&A plans expect second we half and of And these very of in evident price the back to some the company, in pressures the inflationary M&A, well, the M&A, and reasonable favorable half carryover due the actions in favorable we to when that of expect XXXX. XXXX, start these associated XXXX. let with the of result our the about completed our first to reasons, pricing those a the were XX:XX deals, particularly As savings positive, the in XXXX before maintain from Vik a the to being to of back lot then through more improve very would XXXX impact as recent to start mentioned and back each the margin being seasonality tighten leads more themselves half normal more we pricing comp resulted cost end in of strong clearly year too but this a spread half took with

Nicole DeBlase

did guess progressed how through we the Vicente. no easing year? expectation thinking it. your of from you as going into plan got kind we Thanks And supply baked I chain you guys helpful. that the the a constraints on in the put Or Is Okay, see have XX:XX then, perspective. improvement of plan supply chain? together That's what's really in feathered about

Vicente Reynal

it improvement. half. second I positively we're and it our and now come plan and slight very very, mean we for is It take very Nicole. have telling for visibility worse teams on to the question in what back based plan Great don't the action strong of XX:XXYeah.

are executing that's a if And very rapidly, expansion. an markets plans kind see our margin kind benefit pretty So a that stable of being total then levels. our that good abates at we inflationary environment teams these in improvement of

Nicole DeBlase

you. Thank pass I'll XX:XX on. it

Vicente Reynal

XX:XXThank you.

Operator

comes Rob Wertheimer queue Research. The from question XX:XX in of next the Melius

Your line is open.

Rob Wertheimer

XQ? of do how to One can on how Just that of or stability, the pricing one, can cost. you sort the come Thanks. if XX:XX seeing then to supply see manage volatility price know refresh whether chain. of Thanks Good it's And us morning. How hard I'm underneath cost you Thank -- how price pricing quick XQ, pop just out comments and is working it. the you're kind the much volatility? maybe on far incredibly upside? how potential just up everybody could sure, on do don't other flexibility side cost you cost for much you. I

Vicente Reynal

definitely Sure lot we Rob. by hard of point, Yeah. kind doing control. to I can what of work I are teams mean, say, to And it's really control the a what There XX:XX it's volatility. definitely your is

we supply can chain. focus And so, control put our of destiny, of culture emphasis kind is is what your that that and the basically level controlling means of and that, control on high

coming you lends team non-ferrous looking so you we lot average kind going material that a as total very the yeah, with account taking in on of In a of [indiscernible] of then we half bit questions, back, your see commodity and sometimes early at a supply materials a indicators, lot logistics, to I yes, possible of on. of quickly that to I year. what be terms still to of a that kind volatility steel. to see down, if in you see coming is and So mean as is very see sense still the very, up, the second our flattish proactively of of as I’ll supply it's cost, got Steel stable think going XX:XX actions down, not saw you base, a that then to ferrous basically commodity and the

Vik Kini

about pricing in it number second react actions react of of we're I our on your and be your I question job shown to a impact chain inflation fantastic talked process able team indicated pricing of a and to: the the team monthly to able be lot improvements, of recalibrate to connect the of place the across necessary the to of pretty I on as kind XX:XX here in -- really done with a end. to so think manner the team timeframe we've Obviously ability utilizing that the around mean, quick and has mean then context as operations every Yeah, and one, we've context the obviously took and IRX understand we pretty Vicente part in of XXXX, weekly, in supply in XXXX. business pricing. it be basis to the our said, almost we of that flexibility. lot in multiple And comparable then a then, Rob, a a agile distinct pricing that able times of have we the toolkit part much

Rob Wertheimer

you. thank XX:XX

Operator

Please XX:XX today Research. Wolfe question Coe of comes The next your open. Nigel ahead, from is go line

Nigel Coe

back question. the go to Good Thanks. Thanks guys, want of to the just XX:XX morning. for kind I Hi cadence points. margin

are adjusted charges excluded from LIFO So EBITDA.

up kind to from inflation the up mean to also So that steps I steps from that think XQ implies price XQ. XQ XQ, materially of bucket

again that year. on up it PST be ITS so the you versus the XQ like comments It have flat margin is for QX? confirm to is is up be going over going Just more coming looks down corporation. a around IT price wanted – implies to And the dilution, in year to bit do going that to then M&A materially is QX be

just confirm think maybe Just that, about it? how we

Vik Kini

Sure. XX:XX

I'll in yes, take Nigel, pieces here. So those

cost price kind the dynamic pricing. I in think the with regards of to

here, frankly you just least actions to. QX let's clearly largely you spoke -- show and expect correct. in of indicated kind still that and will segment for you is think and the taking decline has at recalibrating XX:XX pricing still looking Obviously, ever the of will QX evolving margin it, we Vicente the, call are show to margin given that spread, year-over-year, saw M&A pricing comparable can environment we probably what terms attributable are In at as to dynamic. I as the appropriate, PST

the in to so and you of up more of I of would On get to up, indicated of the overall flattish say, at the also kind probably be, can to QX for look obviously side, slightly we of environment, would slightly we has XXXX. kind line ITS expect to ITS that is kind to expectation that with so rest total corporate of that flattish noise the being kind and some then

Nigel Coe

out, my great, environmental just upgrades really sounds some we and it order strong follow-up of Okay, North thanks. stands XX:XX to once is elements is America like you seeing and And again benefits it pretty compressor going might mentioned some supply be trends. chain IoT.

meaningful that equipments flush So existing or does commentary? market a IoT of I'm the you perhaps end just wondering to that if replacement could on maybe require more cycle. And out a is that a retrofit from bit

Vicente Reynal

such we America Latin base. being pleased as food, XX:XX products, also Nigel, industrial were as also the even there. industry. not that, of team well, In but to has semiconductor market mean but Americas, how From strong, anything to only say I really US, performed, terms with an that oil-free mean broad end I perspective, good fairly do will the see I general very pharma, in performance the Yeah.

retrofit they're doing lot also all Investor they can we should a trained recurring and retrofit not look the just the something US. maximize about in Yes, absolutely compressors our that well they kind of so have generate into you're Day, to right. and teams the And line momentum for look of of we're terms we to more definitely to approach the here that IIoT, that during we energy in That and that technology. our the If savings spoke stream very new talk but oil-free that. at is order total the that the when in the we as of well might actually good compressor, field. the revenue in achieve product example, So on the in can going that they customers have IIoT, retrofit, many instances about can they

ASP into point. a I So leads the opening an it's higher think topic that conversation selling door

Nigel Coe

very much. Great. XX:XX Thank you

Operator

question Evercore. Please next comes The of XX:XX go David from ahead. Raso

David Raso

Hi, thoughts Obviously the with gas your from can XX:XX what of NAT you curious, prices. very around you years I time. with strong. us we're so for Vicente, give thank seeing was and experience price oil Russia-Ukraine just strong, is

to positive Just -- trying it cool where CapEx. some these on to squeeze be balance filling be obviously factories thoughts be when the now, are European high of commodities that may gas there prices could but demand comes may of drivers their are, even

about while. here, I the impact curious dynamics think given it's do the that, situation So you know of just especially day early, a like but just last I'm how the of that a

Vicente Reynal

say the and thoughts days go side, to prayers nominal. interesting based our that XX:XX I’ll the that Ukraine I'll is our Europe, you Russia, I tell and say, question. Sure. of -- Ukraine A first mean, very all, you in I of can and I immaterial mean people revenue dark indeed. fairly from I'll obviously tell on our and

high. gas overall of the you energy. I in what that, as cost in the accelerating impact. terms rise In will were to of what expect and seeing potentially based many kind Europe, ourselves, we're projects is already and I Yes, on well these we it, kind our say continue I will cases to that others of very mean, are that seeing prices correlates are they in internal seen have in factories our of teams reduce the to

when speaking are about XX% very consumed in energy and factory that the point. efficiency think high it a energy cost is a So compressors of you roughly

of energy compressor compressors as new then And high long, doing conversation. into I conversations it help are high going the really here that the conversation and we're as to megatrend and people and that customer that for products a the our of that energy really our energy. sustainability our we're in So XX:XX well -- putting think how So factories think very customer point our these base. reduce level to factories prices that can it, our is solar our to be we're increasing putting is accelerate upgrading of we're

David Raso

direction, view, margin were those you half the nice your the hopefully upside you you but that. volumes where that's priced guide you've under or say, glass have your and the to well the made for cushion or hoping is that PST segments, more of to surprise margin you Thank margins some the an a that more just now in more quickly, maybe ‘XX early you let's it is I when the be full and would and if given of maybe upside, goes cost to about thinking simply in price say for could maybe think drive to there margin, particularly if the where, think margins it surprise XX:XX year control. been potential acquisitions backlog at leaving they're if diluting strong ITS little can And on the between to back had in wrong a margins least the pocket it's area

Vicente Reynal

it, our ITS. on will think margin and that XX:XX to it I'll -- QX even in mean QX it sequential definitely be the market continues inflationary that even -- I about improved to actually say, saw will be you rise. it an David, when you

very say see continue I ITS. that would on the will momentum to be if strong So anything

David Raso

Thank appreciate you much, XX:XX I it. Okay. very

Vicente Reynal

XX:XX Thank you.

David Raso

of Our next XX:XX Goldman Sachs. from question Ritchie Joe comes

is Your open. line

Joe Ritchie

Good morning Thanks. everybody. XX:XX

Vicente Reynal

Joe. XX:XX Hi,

Vik Kini

XX:XX Hi, Joe.

Joe Ritchie

maybe first XX:XX question. I my guess So

progressed, curious, As And were even I'm things very chain absenteeism, also backlog in into good. I'm curious maybe all early the of perspective the is quarter like curious, at Mike revenue any XXXX. the and deferrals supply like did get I'm obviously, labor, just XXXX? worse there part

Vicente Reynal

QX of in back terms in call so mean kind but part I now. XXXX a January, that absenteeism to early we of much spiked. absenteeism, levels of clearly I think normal Joe. Yeah, we're really spiked the there XX:XX is can not progression out that

fairly So of progression quarter kind the fourth in rise. I'd we on to the say, terms to continued why from passed better emphasis to Omicron. here have to normal, but absenteeism inflationary, incremental our of we here -- continue more we in That's quarterly normal continuing now have we a look of that the that see we first And spike increases stability in do. as quarter, the that price put

Vik Kini

of that consequence frankly fair the of deferrals level from even an commitments to [indiscernible] we could in things in QX were obviously revenue fantastic the that base and here John, second they a any QX. from customer bit your the of deferrals any of backlog like all some constraints asking nothing obviously anything of door some a I chain or would anything a given true out of topline for teams single XX:XX are the and that, think perspective. in, nature get part to probably terms Yeah. But of things And the in chain in there a is given the what you organic point quite terms low acknowledge growth still perspective could nature. did job and question that there, supply our What of context and say just backlog past at due obviously I hitting say constraints, being are fully from we fully have Clearly, digit frankly a intent little expected points perspective. argue, supply But environment the quite been better. again, to

Joe Ritchie

Great. XX:XX

to then margin in the holding wanted second. Now is focus I back on going -- feedback that's my a for And PST and hear. guess on great to I question follow-on to particularly

I'm like level through business back in of curious have that just synergies to maybe kind 'XXs. we of the in progression of I next are type margins more the XX So us talk the over and cadence low margins that just you see think like months? what to PST like the as gets or kind those kind the business, coming XX

Vicente Reynal

XX:XX Yeah. Absolutely.

of let EBITDA extremely in Joe, strong way than the it it, indicated is is not from QX segment think the gross the thinking margin more that better in our overall mid-teens in profile half So place, gross if latter but which a roughly we the XXXX, margin profile all of perspective. million $XXX realm, margin we the purchased SEEPEX I when revenue me everyone, just was that on, base spot you're business about calibrate PST -- margin margin business

is you those speak. of So actually tell lot you're in absolutely of place. will actions a there motion plans going are into obviously right, kind we synergy I as

the think I it we profile so perspective, thought XXXX margin be And eclipsing mark, margin context it -- a from the the to way that expect in the about where completely fair. here have is margin you EBITDA of XX%

be to of to this year margin time. in continue I that think X-year even a profile. not frame integrate point always obviously we closer then expect said as at X kind PST the we've we within to segment time We're

also quite from still here a The we ahead encouraging. mid-teens XX% frankly, to us. very technology to the PST broader is then perspective. the little to obviously have is commercial obviously So of complementary over road getting the integrate a within And quite segment. year now as first bit from other start But a we is of piece here

our coming the good again, some we now. of progression speak that progresses, So better well are those some growth that. see frankly does is as expectation synergy quite on continues again, expect in Obviously, profile XX:XX just get to correct. we margin So XXXX we're to synergy given revenue from actions as you there that taking be right pace, everything

Joe Ritchie

to guys. Great XX:XX Thanks hear.

Vicente Reynal

Joe. Thanks XX:XX

Operator

next question Please from Our go Jones Stifel. of Nathan comes XX:XX ahead.

Nathan Jones

back start I encouraging mid want to with start cycle talked morning, good to larger into to XX:XX think starting we morning. see Vicente, off everyone. as the I projects is to later come the Good back market. -- or of you which for you're more capital into seeing of markets, color is over some about you end come market, think see where projects, Can you what little a what those growth on years? starting to the us kind X the next geographies give projects? what kind you're those those X outlook And in capital

Vicente Reynal

Yeah. XX:XX

we're that like kind we about soon Investor and and our as momentum India wastewater what of I on in on In is role. is excitement the kind you active. momentum come to saw is what lot I a that's highly C-suite the heard a in one we're EPC yet or one China news that to seen products good energy I how in good on C-suite in seeing Day that what in wastewater. meetings And in terms that, lot And some good actually that can Southeast being here, hydrogen water here But a seeing of projects of some And play as these we Asia we're large of conversation. XX:XX and pretty Where end good anything where, there a think to kind project and expense that from in in I maybe. perspective, water a lot conversion, spoke mean business we of is So even from does Middle momentum. Asia piece call come very a lot our large market conversion perspective fuel we CapEx, hydrogen the to haven't Pacific our to aligned strong see definitely our compressor Nathan, is East. momentum come. and continue of we the of it had -- an with yet I except seeing or as the and from that company

Nathan Jones

up I energy to of on efficiency on your And to XX:XX response Dave's follow wanted the compresses. question

point energy period about of the contributes? manufacturing these usage one metrics of facilities. on the that a kind any it operating consumption XX%? kind energy to some the that payback the what it's to I usage, pumps Can costs facilities. of electricity things you the think you at these talk costs of those facility, and contributes And have important compressors compressive these is operating around What what of reduces by pretty that usage an of in contributes power significantly the

Just give customers the potential idea an of are for here? people to savings what

Vicente Reynal

less or on a in energy projects even now, cost absolutely, payback cases. Yeah, some where Based year or some XX:XX the is Nathan. it

depends quickly on on a the -- that XX type in consumes very the to excited were a So of XX% clearly you where or are compressors the blowers And if well. factory. you a it when on look a also country facility, but only compressor for or energy. even quick. mean, in wastewater example when it those China at that is you gets the I opportunity, the compressor, too energy very blower. high as of energy payback at one And fairly where it's the the is costs XX% I approximately consumes of think fairly but consumed of not again, I’m point, factory, depends – it actually average blower about Germany, your look The that

that XX%. very in we than a utility And us, XX%. that received call received more size savings, because our so phone on that reduction based to being they energy the beverage they a can we tell by -- terms ranges from but from of were us point we're have reduced some XX% And from -- you that a of installed dollar they company of company, XX% your absolute to upwards the we called large or of company, talking there and call told basically the it compressors

surprised thinking energy, and they hundred was happening couple consuming of compressors year. is down factory thousand of per the what were that that they were that energy surprised potentially savings dollars it again were indeed, shutting cost XX% So the new therefore energy that of company utility

Nathan Jones

for Thanks taking Great. XX:XX my all for the Thanks questions. color.

Vicente Reynal

XX:XX Thank you, Nathan.

Operator

of Volkmann question comes next The Jefferies. XX:XX Stephen from

Your line is open.

Stephen Volkmann

has of do do guys. answered, circle in Hi the obviously stock a kind opportunistic balance we're environment? curious, XX:XX have protect what has type in downdraft dislocations just like focus Russia given repurchases your of Or little here. been more for been And your of that and this global bit Vincente, but balance now, you the in I'm you on sheet. you caught the of the seeing kind wagons Most sheet, these sort playbook

Vicente Reynal

change of I good market, XX:XX question. of to more to kind I’d say dislocation of -- And on M&A. these be mean, don't Jeff, opportunity our the also good we be strategy. in dramatically to is honest, a aggressive this kind want

even get the to the to way price more points of was of appealing more before. level kind the it that -- are Some actually

then very continues So very in definitely to Yeah, be definitely see from $XXX be use we saw, have the on obviously that prudently. dislocation. we approve of that we utilize mean, you good that number we our saw I as share cash, X plan to allocation aggressive which million of that. good M&A, capital But the to opportunity but and this repurchase you Board type priority,

Stephen Volkmann

thank Great, XX:XX you.

Operator

XX:XX ahead. Please Wells And O'Dea go our comes question Fargo. Joe from today final of

Joe O'Dea

IoT morning. XXXX XX:XX -- kind of what would Hi. can kind kind ready give penetration you for toward that's in of wanted of gave? that's insight Hi, but of and of digitalization terms terms whether in you're the good targets at looking in of or be successful percentage you of think about terms any I And you're what units XXXX kind whether what When the you field progress of about us products, framework targets? thinking you of in X-year

Vicente Reynal

benefit think XX:XX the revenue revenue enable specifically that that that we continue have us it the we we later connecting. for our generate, shipped as digitally case, relates is indicator that already In as very we to being this with SEEPEX. a I mean that even I service again, say on service this in great with into is acquisition thing how into then assets revenue our leverage a XX:XX shipping great there one then it that technology, of software kind go we're an these of recurring cavity standalone to pump companies is we while that And clearly deploy our that SEEPEX on to and level is a Joe, is we're I companies, we've revenue, here that kind And a team we we're accelerate that entire that a how company, And digitization in these we that is comparable case our that, a future team the IoT, that streams. excitement of our of can tied phenomenal progressive some also we was business. SEEPEX only also enabled M&A to we're kind the doing companies specific of that a like to that the company. goals and could metrics, products so leading to digitize team phenomenal. comparable we compressors one standalone find IoT the of much is got tell better to And indicators and Not across doing IoT of able were going just goal and as of as deeper actually the assets that job the great highly case, the that also are moved in mean too well, lower some excited benefit a of unlock. to the and connect our compressors. objectives At should but and such not very to got entire great digital we're very great to particularly to that

topic. So around momentum good good a of lot excitement and this

Joe O'Dea

Thank you. XX:XX Great.

Operator

questions hand management for I'll We to XX:XX remarks. team back in the the queue, have further so no closing

Vicente Reynal

you. XX:XX Thank

company. for life these we close, we and life which actually to to a are perform this the and employees, difficult outperform important customersm some control make and even to we very our particularly as Q&A. on Slide that really of pretty we have But maybe performance, in As and execute team what the shareholder, the in too, control, can case, our someone we X, also planet times clearly and better employees destiny has the able in said shareholders our from environment see ownership you because these their volatile mindset, can were also on as we to are

with that, we're I thank want a to you support take XXXX thank year are to big to was say, big of you So our all all a just again, that giving to that come great ready a XXXX. employees, and the here us. any you on challenges into

again. you thank So

Operator

you today's for concludes Thank call. XX:XX This joining.

line. your You now can disconnect

Ingersoll Rand (IR) 24 Feb 222021 Q4 Earnings call transcript