- Earnings call transcript Q3 2022

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Operator

Hello, everyone, and welcome to Ingersoll Rand Q3 2022 Earnings Conference Call. My name is Emily, and I will be coordinating your call today. [Operator Instructions] I will now turn the call over to our host, Matthew Fort with Ingersoll Rand. Please go ahead, Matthew.

Matthew Fort

Thank you, and welcome to the Ingersoll Rand 2022 Third Quarter Earnings Call. President Relations. Vice Fort, Matthew of Investor I'm And and Financial CEO; this morning Officer. Reynal, Chairman are Vicente and joining me Vik Kini, Chief will We yesterday, the release earnings be we call. issued during referencing and these our and presentation are our of Relations website. available on Both Investor section the

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

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

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

the GAAP and in Investor release, on most comparable You Relations our On a call, in both to strategy our available XXXX of can in find update to measure time, provide accordance of Instructions] segment presented our guidance. to reconciliation an company I'll a review our with the presentation [Operator update, call section At measures of today's and highlights slide provide are earnings which Vicente. over the and this website. calculated financial and turn we will these

Vicente Reynal

another Thanks, quarter begin employees thank deliver would you in in good worldwide work to to QX. for like Matthew, record and with all. us I helping our morning to a big their hard

like on in owners You outperform our consistently customer deliver challenging process leveraging act with Every purpose continuously environment. to am IRX and our a impressed day, you're how exemplify think and needs. our I to

review we Slide Rand. have and impact accomplished And these quarter the now X. this we performance on as owners Our reinforces results of Ingersoll how let's year-to-date

and reflected to is in Our in commitment numbers achievement our the Lead Sustainably. also

through can that we a uncertainties and demand commitments. on we how control Through industry-leading to remain growth strong while continue through while organic execution. will position intrinsically is creation balance on to strong. operational benefits we our agile to long-term be our sheet today's Remaining you customers. leveraging concern, environment remained continue generation geopolitical supply and product execute Ingersoll and Rand offers chain today QX, our accelerate and sustainable innovation what in to see continue And value We for mindset macroeconomic, to focused demand critical,

capital broaden addition, to high-growth, In we're acquisitions. we will sustainable Today, in through we which have to focused end that contract X position companies remain or growth our new committed on exposure strategy, our inorganic strengthen is allocation recently our categories markets. and highlighting acquired under core have bolt-on

Today, on model Turning we what critical elements to we Slide X. of will controlling stay how demonstrate focused control. compounded can discuss we X to our

to Moving Global Assessment. the X, news Sustainability to We XX recently we exciting Corporate Slide share. of S&P score on have a earned some

#X As at list. of within us this less is percentile America, North North our even XXth in the America. world #X very #X were the on October not are our score And industry ago, it, which today, showing in think XX, the impressive. about we X And years than we in in puts and industry, in

up portfolio Lead bit water a the that reduce and Call sustainably. improve Sustainability strategic energy product our operate U.S. and to is system. shown likely markets that sustainably recovery where globally. here enhanced an captures device In savings and grow help for number opportunities over less on based On to warm And XX% compression heating, simple X air we We there highlighting unit believe for our our innovative $X.X is broad be air sustainable, water slide, continue customers of The with our from during end payback in year that that of September, space X second are processes cost which to alone, approach we We by period it greater used billion our portfolio Xx in or align than imperative, hosted compressed Annual supported a energy examples on is a the can heat this for that two-pronged on introduced megatrends. other uses I'll high-growth generated consumption. to spend within efficiency average. Sustainably,

is Our critical occurs perhaps example. blower products This compelling a eliminate by water multiple technology is applications. ways, blower fresh for in used a impact The requires conservation replaces leading that technology most on pulp water an alternative supply. usage Runtech but water it and paper our that in the need the turbo is technology and manufacturers, perfect

base X.X billion could sustainably gallons Xx To saving amount electricity more United own the into adoption year XX focus operate estimate than Our in of bottled water States of We water around we is over greenhouse our of to the gallons year. be currently existing Runtech installed per with business. our part integral billion full emissions. saved on drive globally. that potentially perspective, an put our gas that's the of facilities, a water water consumption annually. of Within world reducing and technology consumed that the zero And is

choice the we Our on positive of commitment better and suppliers for we're makes to a our supplier in our sustainably operate. customers. operating planet, planet building in and stakeholders and with a creates This a sustainable also future impact Ingersoll for Together, inspiration of for a employees our which sense our within delivers communities. purpose actions Rand communities by business, our our and value commitment and leading has

Turning X. to Slide

to we continue demonstrate to us what can on how Let X simple growth. we control deliver organic examples control

has an marketing Russia-Ukraine a trend QX, the start clearly generation we execution at which demand example the war, of have challenging of been a Europe, saw or the In qualified downward market. remain to to in leads On agile generation data vertical-specific jumped all on we left, demand and channel and trend and immediately revise utilizing sustainable campaigns. that MQLs. high-growth, action, into focused IRX team through webinars campaigns targeted The leveraging invert trend of markets, energy-efficient-related

we from in and orders which of in orders. MQL, compressor Mainland a you digits, our saw grew for Europe increase in XX% continue actions, our results, As for a these low remain the leading in portfolio our healthy to primary is FX, can ITS. single excluding indicator And as result see

an the merger product IR right the execution On IRX, portfolio to operational medium-sized improved the of example efficiency iXV. the from and sales the structure, of structure China development Post and team those on the the highly improved have volume Denver and the Prior competitive the also both separate cost leveraging through the customers structure footprint. The integrating of portfolio in had Gardner and from practices line, the and in triple-digit cost China. for compressor product With compressor right GD. but merger, not is product new IR channel or XXX%, X% market. Through they refreshed fast-growing line did to solid channel. process, best focused efficiency unit legacy outstanding end an the a Gardner Denver result a market, to over XX% expanded in revenue by small- utilization in improvements growth we and is

expanding bolt-on close our to call, QX increase Since signing value ecosystems our flow to with accelerating by we core X addressable while of Turning the X. technologies that us mission-critical creation acquisitions market announced adjacencies. earnings enable our across Slide

quickly let me So you deals. walk through these

of services provider air relationship aftermarket in products leverage support based to expansion for strategic example segment leading growth. end-user ITS full-service compressors which will convert strong Airmax, system First, compressed is air is Airmax' technician and of network and an France. This channel a our a and competitive which

and Spanish vacuum manufacturer sustainable a our Gil, Pedro vacuum and This of leading including in is categories systems. high-growth, strengthens acquisition Second core blower in markets, blower water and wastewater. position

business technologies is significantly market our These adjacencies. in strongly Everest, right page. Page Continuing of are the blower with filtration And immediate India. purifiers of solutions. and air. recurring strong systems key These Air The increase high-growth a our one since of are examples leading moving in manufacturer products the more of treatment portfolio which compressed product acquisitions they are into our in strategy vacuum and Indian systems. portfolio Next SPX or enabling aligned from adjacencies our these on compressors leading is than need Everest addition, manufacturer for and aftermarket synergies. expansion complementary close of with desiccant generate to FLOW dryers, presence business. great highly air X, refrigerated a of of X Treatment left These close to is XX% broadens core and

is in several Area And U.S. enhances Next, that Technical, hydroponics improves leader Dosatron with sustainable a Westwood is a finally, IIoT is in specialist, IIoT and digital International, Westwood Low our Power innovative, through end and solutions. capabilities Networking control, controls Wide Systems technology. platform, experienced complementary and instrumentation our product which including differentiated and markets, markets flow highly agriculture technology to for IIoT IIoT high-growth, solutions our YZ which which line. water-powered

regional at acquisitions. expect We IRX excellence in have the the seen and our prior level you integration acquisitions proven model to that of by team integrate these utilizing

strong. was the of our to turn Our Vik it in will on presentation larger financial remains I QX QX of today, as to performance. over M&A funnel Xx than funnel the remains still provide now And XXXX. over update

Vik Kini

activity. from indicated and XX% as million, strength we improvement, of respectively. up Slide despite our the increased XX% quarter, actions, growth a book-to-bill million sequentially strong and the to revenue XX.X%, posted sequentially. Free X.XX EBITDA ITS to We a year-over-year XXX remain many and is XX% global million by We on which market X, operational $XXX third on to stands have ongoing we both track over times, as the XXX of organic And at backlog. XX%, $XXX ongoing by a despite of year-over-year of $XXX excess well delivered we on strong inventory we the fueled company uncertainty. backlog, company for macroeconomic XX% point our year-over-year, balance by in due to performance company for turns we take million point we and to PST billion QX. of respectively. chain have need adjusted in was and macroeconomic be quarter are and by encouraged million quarter strong merger. improvement the was from and and revenue end if warranted headwinds that ready a funnel basis encouraged total synergies IRX, cost continue with supply year-over-year. in saw and orders double-digit The at Thanks, execution the $XXX EBITDA in adjusted $XXX incremental a QX, cash conditions up Vicente. $X.X commitment commercial approximately improvement challenges of quarter of Overall, remain of XX% And and a flow the as deliver support margins Total liquidity basis from

which turns, X.X than the X.X Our net turns at is continues improve leverage to and is prior quarter. better

Turning XX. to Slide

seen acquisitions company, increased And line of the impact basis PST on the well ITS costs year XX% we full demand. year segments $X.XX QX. speaks the with cost PST's terms the of now significant the are When declined in corporate basis a It's exclude for the PST as in for orders revenue remain Total For margins, historically our back XXs in in XX.X%, XXX at grew price despite prior note million as XX%, of them and completed $XX the And well. year as prior did actions sequential adjusted company in increase adjusted adjusted approximately by X% the XX EBITDA increased that EBITDA to XX the and to we the inflationary was ongoing XX% to per quarter finally, share. margin tax nimble EBITDA impact came were segment total margin impact And points quarter in up the rate margin EPS which points, have XXXX, of year. prior points. QX by adjusted both basis. both FX-adjusted PST versus where being And low M&A the see to XX%. an of COVID-XX-related positive primarily team increased quarter. actually points, The which at we segment basis basis up driven Adjusted margins while important the dollars, XX from increased headwinds. generally was for anticipate

for an support of million. Moving $XX turns, CapEx primarily inventory now liquidity cash next billion of for Free totaled quarter will million quarter we our to of was quarter payment. to credit we quarter included back was M&A the of to revolving million Vicente for facility. for billion to remains despite to the $X.X our Cash and our sequential on I priority cash primary improvement. was based the at leverage million the flow forward. dividend capital usage turn be turn repurchases discuss allocation, stands top now $X.X and the and on to slide. $XX headwinds And continue the share approximately our backlog. billion our X.X for performance. $X.X $X million availability to as segment which expect outflows look during $X $XXX Total call cash X.X M&A

Vicente Reynal

Technologies XX, XX%. organic Thanks, Industrial margin margin growth strong prior basis an our adjusted and Adjusted with from XX XX%, year-over-year, Vik. rose XX% year, On split year-over-year price an Slide revenue of between segment points Services evenly up of EBITDA and volume. EBITDA with of XX.X%, delivered incremental

And orders the turns. to Organic that margin were expansion organic which stack, basis up far, we also that orders a XX%, for demand strong a sequential We delivered X-year see grew on XX XX%, book-to-bill meaning to XXXX segment QX X-year from ITS line X.XX the QX QX. with strong approximately is of continue products. note of our with in thus stack, points

Lifting a remained delivered oil-free America to with of categories. in In was products And segment and solid orders further FX, products breakdown grew team in Starting grew saw the shows high on Latin revenue. Americas up orders orders North up XXs Europe, mid-teens. the We with Moving digits. up while orders high America was The which performance XX% the compressors. mid-XXs. Mainland with by of growth strong the for Pacific in orders low while impact negative oil-lubricated on driven X% across in The individual the XXs both Pacific. The Asia growing figures across headwind total continues a were exclude Middle up XXs product the and Asia double Each digits, and high growth performance, growth the high percent vacuum double their orders of digits. a team low orders East In China global in single up total and blower, in global business Power the with and orders in basis. the delivered low digits. growth the rest single India and the low the team strong were single-digit Tools digits double for high

high-growth, and of The and highlighting launch. our of in portion in million research our as thinking Americas, has it this times, the capacity and facility. employees clean of relaunch very part May also slide, booked of orders since example are New markets to our is over Moving and activities, innovation not large and gas but sustainable sustainable localized of the energy. reduced such like end manufacturing up and Doing acting XXXX the Buffalo, expanded a for real the site global we're reopening lead XXX% only This owners. action tangible products has $XX York with customer over inspirational our air centrifugal

split in Revenue Technologies price Science XX. Precision XX% evenly grew Slide to and volume. Turning the and organically, segment between

EBITDA XX margin basis points adjusted delivered Adjusted XX%. incremental with PST of EBITDA XX% XX.X%, of was team the year-over-year. which million, Additionally, year-over-year, was margins up $XX down

the basis the side the adjusted year bottom decline of in in by XX table illustrated basis impact left year prior and at the As COVID-XX-related impact page, driven points is points. demand of EBITDA on year-over-year margin of at acquisitions the XXX prior the

accelerate stack COVID-related energy. acquired a normalized Since X%. the X in orders primarily the such headwinds innovation investments development sequential XXXX offering, X-year integrators. adjusted significantly by as orders product QX However, Adjusting installed pumps environmental QX. business. PST were XX%, from up performance. to clean were a business up points and the From is sustainable demand, from new comp-related acquisition, impacted and a vacuum which Organic system the X% in leader mission-critical markets has launched QX X-year were market Dimensions. serving by OEMs diaphragm team end major margin year of higher-pressure operational This and basis organic execution in leveraged is IRX comps up in orders, applications securing than Thomas recently EBITDA and from a highlighting to for due sustainable higher we're orders Air stack, year-over-year action, price/cost XXX in our as improved prior On approximately are orders organic

As the how revenue post and X EBITDA digits example a through is than of of a margin achieve is This in quarters growth power to IRX low we business mid-XXs leverage from less earnings seeing of result, the adjusted low to double acquisition. great improved XXs our model compounded has the growth. double-digit

Moving to XX. Slide

raising organic ITS growth point is to increase of and by expected performance, ongoing on to of operational our approximately are revenue XXXX XX%, of headwind The headwinds in guidance. terms is strength given basis negative guidance the In compared our PST XXX from the organic guidance we based which XX% impact now the increase from contribute company and of the guidance, to prior total X% prior to FX, segments. both a in offset commercial X%

are year, full total growth. to XX% revenue we XX% guidance the our For at reaffirming XXXX

are of fourth to rate approximately estimated approximately XXs the tax CapEx $XX be to X% million to XXXX Even Interest is with we from this to flow low conversion to adjusted $X.X when our income back and demand, guidance Due the XXX% year. to range to be of Important to nearly And be approximately midpoint free our expense we adjusted anticipate growing note about EBITDA FX flow million as by free includes the in $X.XXX inventory prior the billion we raising quarter. and We meet guidance at be in revenue. cash to the in to mid-teens. our for between and are cash the to adjusted this investments beyond. XX% compared We headwinds be guidance. conversion net tightening in adjusted to flow also expect free EBITDA think margins change, billion. expect expected cash $XX to that return

guidance and acquisitions include M&A Holtec, Hydro of Our Dosatron Westwood Prokav, Gil, Airmax. Pedro does Hanye, the Tech,

However, to impact due remains acquired seeing businesses, to effect. of the overall for M&A guidance FX, prior year with revenue the guidance on the Seepex and previously largest flat specifically Maximus

Slide Turning to XX.

in will Rand again planet business. to To engagement This I is rapid up demonstrates IRX thoughtful, and our optimistic. action-oriented X agile conditions of employee close of challenges our for decisions outlook ongoing want we eye to continue may call, continues wrap the remain to of first you reiterate prepared which come. our ability our owners recent our Ingersoll very to today's market continues want continue consistent on remains show leverage commitments, changes It for improvement, We drive any that most that strong is better a we full by delivery for I employees, ensure thank keeping To employees. facet welcomed year exciting our delivered quarters we also that and drive while and for engagement our to our we the make XXXX, stockholders. life you the survey As in position. a We're dynamic to and across results on are. customers, your our like making every our the to strong are

the we sheet deploy Q&A. allocation to the record disciplined market that, With with open investments balance call have for we will back highest Our I as continue capacity our the operator of capital and to capital remain comprehensive resilient strong, strategy, and the to turn with is our outperformance. track return and and

Operator

today from [Operator Instructions] Our with comes Halloran Mike question first Baird.

Mike Halloran

here. questions Two

unique healthy quarter. of there's pretty the here. at the on about of when little Any the the considering just really any continue side? look saw First allows Rand do trends and the volume you healthy is indicators impressive those going you that through you weakness? lot trends there? Maybe notable? a orders backdrop to order you able Ingersoll to, talk And question, areas leading Anything Or in a just to signs that clip you that concern on be a to obviously, going bit pretty are think talk forward

Vicente Reynal

we very nothing as Mike, driving segments. with overcome showing then call, classify and our of that kind see clearly, have or the in continue out very portfolio will great example Clearly, our can I of we're that important the dynamics do that I'll that to it's the I terms has think the continue place. earnings good, -- it's is services generation, any we a market say that of how or here to piece mean highlighted it's up of there. points a helping us And demand on we the controlling equation. as robust major we Yes. just significance lot across what a some control. continues here regions, stable, down. be so that initiatives teams Clearly, proof I in aftermarket the And

Mike Halloran

have And of upside being comments Vicente, if a And the I the the act of into leverage some to things if know, drive change, I about ability you synergies able environment heard to history some to quickly you've changes. Vik's got range. those to

just in what kind And so I real-time trigger to is, of I'm guess able looking for wondering basis? pull that what guys things be a to you are more

Vicente Reynal

and nimble as you quick pretty the that agile with could we Mike, in action. place. And a we're have planning of to lot proper do Yes. that taking and in has expect,

those playbooks team order materialize reduction So that immediate if the we have and that, in several we patterns, with or have cannot downplay the take will action. definitely of decrease, that terms at look we already as we see demand scenario we

footprint. And Denver a of those the pull if it's is that the MQLs, So of continue continued companies. of one you as synergy the we just our Rand the do creation here area we and much another one could companies, Gardner large ready of I the about and integrated example footprint I mean be can from period of to expanding couple the Ingersoll we the during the order past indicators, in at, this two trigger. the of think of rates, -- years, leading to it, didn't think pandemic, look on middle merger that two over we're

Operator

with Our from next comes question Barclays. Mitchell Julian

Julian Mitchell

but get the few ramp asked us on the EBITDA hundreds understand times you this time. last in know Maybe one very help fourth term. months, quarter short of I a more first that just question

and is up $XX sort sales I think even it EBITDA slightly corporate about with cost. of implies a down sequentially, wider sequentially are then million

So maybe just X moving those how us sequentially. between are help up segments understand the earnings

Vicente Reynal

mid-teens think basis, slightly way sequentially, think guidance, end dollar slightly some third XXX growth of revenue headwind kind QX Yes. an QX versus as fourth points. quarter. a roughly continue to lower top maybe move absolute be the a the of I an what XXX in And and quarter. basis on falls of you And on about Fairly is consistent, it this saw to the the Julian, year-over-year, to of we M&A through about implies here of up points going in additional FX be of than organic basis to growth the But to similar, compared organic kind QX. above. to think the growth off the be fairly, XXX M&A kind

segment given we is EBITDA you when this to from company an level. I the you perspective, price and in to this improved I QX to level, similar, taken fairly put would actions kind see mean relatively QX QX, together, and staying inflation to flat, all that is that the the total comparing exit continue of flat already So have realization say, would

forget closed So particularly the go realization moderate improvement synergy we'll million to see synergies acceleration about we don't merger-related PST, as have $XX on the also second roughly quarter-to-quarter. we XXXX, again, half And -- we deals volume. ahead. of the of we still tend roughly a move had of continue expect to that see the for kind to that to M&A we in correlate some in we as year, that

again, in So quarter. here we'll the some see of fourth that

a us are to a that X big consistent the being FX. kind improvement on QX, headwind see though getting the variables even revenue to to, the point, in QX core with So still those roughly allows of your we're we EBITDA prudent

So despite what lot the really headwind execute loudly teams to a continue continue of see. just that we again, speaks to it to well

Julian Mitchell

by orders low and on to a kind of just color They PST, trajectory COVID quarters There's the headwind. single IT&S on very sales sort helpful. thinking for And good That's of a quick up how then the orders couple there. then in of my digit region. you're massive a Maybe were maybe Understood about row. organic focus follow-up.

So play orders maybe we in next about quarters think out? few do how PST

Vicente Reynal

Julian. Sure,

these you you the of said exclude from QX reflecting happening stated was orders Investor well relatively in in which the range. targets view kind -- of in not in now. of our growing was X%, that, impact think ex I mid-single-digit line with up we here into QX COVID that in XXXX healthy plus When it QX terms large kind and we PST of as the and PST Day saw

kind continue we move the As that range that -- teams to few kind expect of quarters, to over that we as move in next the continue forward will deliver we forward.

Julian Mitchell

enter 'XX. Got COVID it. And we as the headwind kind out of drops

Vicente Reynal

noted QX. a less mean, I there's QX nothing. significant. but mean bit as fourth -- A here That's there's more obviously, -- yes, mostly in definitely Yes. XXXX, little was to you're and it right. going quarter, And the I

Operator

from comes Joe question next Sachs. Our Goldman Ritchie with

Joe Ritchie

I 'XX. pricing preliminary growth, I to on throughout pricing guess do ITS, XXXX you in thoughts off, then early been it too framework, think very around for curious, the be the particularly but have year. guess, ITS? in about that starting to has Maybe just thinking some So order and the notable the any strength I'm has how And carryforward might about also, Vicente, think strong. comments been about

Vicente Reynal

Joe. Yes,

particularly we this here XXXX. I in strong on of and provide the couple much and is detailed So very think a book-to-bill revenue to guidance XXXX, mean as a we're X, kind had in But about items on of to perspective, over not going clearly that a call consider, QX even we ITS. stronger from a

we output. compared quarter, revenue more increased though build again, to QX backlog as in built had to second so continue We the more backlog. we obviously even And

even we're heading are to So to kind those very to spoke momentum. price, outdeliver that the mid-single horizon had. lot grow can forward, of of said we of do again, continue how the into have to I product And deliver And the commitment price going as at so is X% a regardless can in will with terms that pleased perhaps being the continue because conditions. over to in we're that's has around the have the it that this have then least that to we that we we than mean kind mission-critical. to align X% backlog that to. the move gathering period generate and we digit organically any us, just allow said much our market we to continued of nature of continue historically more think XXXX, at I ever segment of that digitization, of we megatrends very ITS good about, market of committed what And that or we sustainability,

we as we're inflation much that kind good definitely expect we'll holding into which -- about favorable the price. that will price to think to a XXXX, than But as that that starts to or you of inflation stabilizing, I XXXX generate be that that go decreasing, of definitely fairly is some stable carryover, when higher continue plan that seems of more of is kind be we think to new thing that X% the carryover price. as or turning as will So well X% the

that of good that, also that the move forward, drive we're margin that doing expect on very we we'll integration to So recognize we I continued continue M&As continue the as here. to that momentum see And expansion.

Joe Ritchie

Got helpful. And one for if it. I maybe Vik. question then -- That's super

quarter, a you $XX that You adjustment. guys saw million had this LIFO

the kind that adjustments? year, guess there in it forward last like any fourth maybe just surprises I that expect I -- just context maybe provide quarter. happened in around Like of regard. the timing aren't some to kind you Can the of of what going think

Vik Kini

that real Yes. one take I'll Sure, Joe. quick.

of first with each So consistent done, our you from book just really state operating noncash basis, just on And is practice. the adjustment kind more it's this believe books out is do It's foremost, non-GAAP we historic accurate more noting, and worth high a LIFO as quarter also We adjustment, purposes. true or our tax our assessment LIFO adjust the we FIFO which reserve one, adjustment. as a of our level, a so do results. XXX% indicated, It's performance. frankly, such, for

You thing. the fact, saw almost enough, same dollar interestingly exactly was, XXXX, we exactly impact same in in the the QX did And amount.

really to when requirements, in line materiality deemed just regards I'd be with do a that basis it with and the was we more given timing, appropriate quarterly we've XXXX. much was accounting to monitor seen should determine that dynamics here the that obviously, it And in inflationary make Now on that adjustment of made. say adjustment QX to the

metrics, inconsistent with being It's the non-GAAP financial I take guidance, would again, that And that our or seen you've say our also in dictated what that adjusted and circumstances the it's obviously, report just we of So EBITDA, adjustment historic. way worth adjusted be here whether noting, facts have it QX. not here all the we XXX% EPS consistent.

and consistent how how number with it's of whether but you we've $X.XX historically that we've that's the guided XXX% that saw adjusted or the EBITDA So impact, reported. excludes EPS, adjusted

Operator

from comes Wolfe Our Marin] [Bastian Research. next with question Sosa

Unidentified Analyst

congratulations add-backs reserve. just So why so and you something any question could on Maybe if to I you curious And quarter. can, little color it a shed the future on are the seeing about LIFO on large. follow-up the of was I a on And was QX? bit you inflation. ask more wanted

Vik Kini

LIFO is keep the the be last impact would whether inflationary where commensurate to obviously I mean we the year it the adjustment market. given there. as it And in trend, inflation has levels obviously I'll correlated Yes. been seeing seeing you to expect, that you're year, this reserve here. have pretty continued or short

basis. I've whether So is guidance tell reflective comparatives XXX% consistent. practice quite said then whether regards I you've operating it current our seen answer think such, be quite that. easy that's our there. more frankly, year-over-year than -- before, us we're of being, metrics or It's to not direct on or And of our that I'll it's frankly stating And in. would the as actuals kind report, you, that's a our But again, the what with non-GAAP it's our environment I what reiterate

Unidentified Analyst

helpful. in about And would my be That's orders question Great. follow-up compressors.

a orders light pipeline single Europe? what's high marketing qualified shed of against if they little low the of on maybe the digits. had and lead China could Europe in looks And like? bit single softer a a stack light you little more of while up you MQL order Could Americas, order digits were middle So you XX% in book your on and bit how do maybe conversion shed and

Vicente Reynal

Yes.

not internally. think line, In into Europe, by And whether been I region together MQLs don't terms take MQLs. slides, a conversion saw to I saw, team in driven of system we actually the marketing go that it by mean typically stable, you exciting particularly product whole It And order. at lead point, be your momentum, or terms think quarter. go the in which really the leads. and that we exciting of very strategic the continue look sales increase fourth build we the activities us, of bit little from because, you able as increase is mean MQL, the in qualified what to to again, to convert to really that this that I bit But that a of that kind of MQLs if that anywhere provided here color is we to have we in have that obviously, is between those upward does mean, What again, X continue weeks rate. externally there's We as proprietary about to look percentage have piece you in we been lead to talk we the generates is here the kind one to saw on qualified of the I doing. that of to X say a it's XX% over time

So...

Operator

Kaplowitz Our with next from question comes Andy Citigroup.

Andy Kaplowitz

M&A of some funnel like made difficult the the your M&A to pretty talk Could momentum? seems even still larger volatility recent sustainability of you relatively given know it to the is Vicente, time you able up you've I activity. mentioned step a larger. deals done get been about obviously your Xx your maintain or but recently. announced markets, Obviously, you

about what there. just you're sort of talk seeing out So

Vicente Reynal

moment will lot say of good have think Sure, Andy. in we cultivation time. that the manufacturer, lot that a and on to I that you of vacuum right deals momentum I now the And exactly continue And is think here a pretty we years. a the before, said family it again, and see even from M&A. is I relationship X which time activity over the call clearly M&A, about mean us. Indian transition of XX% the order to I these it relationship been owners that, what to of sourced, at we execute M&A the that and it has even also Everest, mean meaning that. proactively saw right and our the move sole I is on blower in in going is ownership cultivate of And that to mutually that think are to

we the to as processes. mean increase utilizing think a a drive velocity. I continue lot M&A processes IRX So our funnel I we're to you leverage can as imagine, way of the and through

walking there's So of also that that lot companies a that see continued still still see away say I we would demand. we're We from.

of you number in we're transactions. away deals see from and same the deals large that mean transacting, So we're amount a I very, walking very that

said have quarters. the XX companies of over of past kind that So couple no to over we

lot size kind already Xx negotiation have the the you a So and said, addition we're in that, we announced. obviously, that you again, that funnel on movement the tells transactions we that in funnel. to, X excited still of can yes, velocity But currently you the over see LOIs -- M&A of and as

Andy Kaplowitz

it. more regarding in Got little maybe QX versus QX. what us give like Order China. you're Vicente, looks in China it seeing maybe color growth bit decelerated a a in And

this like of was digits RMT has a know done I you've quarter I double helped think single lot work up you. digits up The visibility quarter. it there? low there. last low pre and What's your

visibility your into what's So XXXX? going QX and into there

Vicente Reynal

Yes. kind that ex still we from into basis, month from in percentage a FX, as we posted we the October on I would accelerated fairly stable see demand, QX. the mean here of that Andy, go here even a I numbers actually, year-over-year even say, perspective of October.

the good, continue important see a we think number. the mean I that type -- So XX% time to And this note again is demand. growth stable when we is to when really QX of seeing were XXXX, of China, I

a driving into very of So you again, lot X-year it's that go able here of that tough to was and momentum stack you But team for footprint of with as We the deliver a is and impressive the is localizing and similar leveraging bit more imagine market it And comp. the fourth in continued show and quarter. still, story important -- out, see the products, very the really the even a that we that then vacuums market a self-help. is as can team the pointed execute But of compressors. to IRX. doing, example the blowers that help commercial making for

Operator

Wertheimer Our Research. with next from question comes Melius Rob

Rob Wertheimer

question my So is really Europe. on

way IRX CapEx. spending just energy about up rising Europe prices potential question it's have obviously offset on again the efficiency And to choppiness used need the energy You really gone the hesitancy markets. fundamental for as European some in versus in the obvious

need How you've the market? you with energy you see to coming would a you see them what do characterize done from Do aside there, for being hesitant? So customers efficiency? you

Vicente Reynal

takes than that, the is prices, definitely mean, things gas Europe world you Absolutely, think generating return way is buy be payback X-year That's the sustainability happening to we customers invested us time targets. clearly, fundamental that prices, little a seen their doing And also you've and bit for I term, system. you core good that but payback, helping natural these definitely saving a and but not but compressor. achieve the you're continue a when drop gas Rob. energy because through a that quick of planet one to only that of something the other yes, dramatic growth energy to in in of drive here that natural in on long rising Europe, you're digest places it see about for also as also capital But a palatable less very, very of the yes, when or

Rob Wertheimer

you and And through there. stop quarter that better is worse the I'll demand the so do on getting or into And dynamics XQ? Europe think underlying

Vicente Reynal

Yes, kind third still an quarter, fairly FX-adjusted But we stability particularly, by, of question. the saw orders driven And aligned and Europe. of in we month we've to -- that in mean really the say, that talking ourselves again, sense released. the digitization. into in as comes your growth that terms A in a activities. of been again, we related loan sustainability, cycle of of driving in of, to getting again, what do stable. energy into good of I would positive about the on in perspective aftermarket from in I kind into Yes. October, getting And Europe job is Rob, these transition things CapEx the to see the relating lot of capability even a sustainability good here continues sure. and October to megatrends look service very the in team to terms

Operator

Stanley. comes Our next from with Josh Morgan Pokrzywinski question

Brandon McCann

is Brandon for on This Josh.

may process that in versus Just on places When does the be have two typical you already to order some of been more sort the like questions where MQLs. that on process? MQL this some come demand the with follow-ups of slowing, But asked. first turn impact margin Europe

Vicente Reynal

for customer Brandon, is the low. acquisition really of MQL cost

about might think on accretion even sales a improvement because sending we're perhaps doors as digitally. it the be So guy margin not and knock kind margin or it this to I doing we're would say, all of

enhancing and increasing we're the really so And efficiency.

you put if we the specifically that more -- process, it's anything news say see products a higher actually So I'll average margin MQL with that good margin prone to we're because else, total through improvement. a

Brandon McCann

And M&A. about been for how are then all XXXX guys recently, thinking just on synergies it. the With Got in announced? deals what's you

Vik Kini

kind seen that of we think one. drive seen EBITDA deals, that already take about with is, to pre-synergy do and you've totality, view. about I'll purchase framework about effectively historic I here out in us we reduction turns much multiple of X-year been We roughly in suite EBITDA would has are in again, practice. the from of X purchase it with it talk all have these kind a you've double-digit-type The typically Yes. line of I'll multiple kind way range. across to anywhere low Brandon, as able very adjusted which done again the that think X some The

well. across adjacencies. types companies tell nicely you, criteria, from of seen in are And again synergy returns mid-teens it in all return They of much to and and, or so multiple won't different see with close ability returns, type the kind of our types so technologies all these. as describe line cost and capital, purchase are actually kind types enough, the to our be know we're deals of of very calculus you've which than the in synergies the or, reduce profiles technologies, we the that line would stated businesses, from And segments don't because where is are the And the very want everything the with or happens perspective double-digit way whether look between right ROIC during you alternately, ROIC the through integration these why doing greater a They now, our reason split and is acquisitions. Vicente geographies, interestingly that's great comments, the X mentioned core the historic I any of business. we I would probably bolt-on prepared these at of

Operator

line Our Jones the of with question from comes next Nathan Stifel.

Nathan Jones

do limiting to those like of things, education, Xx in less or you out for like how out that? getting payback customers globally are payback, you you I'm E-Max highlighted, looking kind adoption view than of that that's market? the the being Rand. the get of into couple those product X talked more for do device how rollout X-year kinds of going the $X to think investments. those to Ingersoll ask the revenue cost do years potential opportunity for marketing, -- about questions. you a a of than for that for heat implies Like to billion What's Customers there? and do something that less typically of E-Max, billion a something which that that recovery the $X.X at on customer factor U.S., savings What kinds you have

Vicente Reynal

and factor better that, of I go or not. say we basically the would digitally to customers I'll more limiting it, and is way is way demand the, industrial that market are we think terms in generation why Nathan, in is think I this call proactive, the that even why educating in today. space believe a But we more Yes. efficiently

So this, of help We you water and technologies to a Europe. I about them. hear customers. drive for things technology in that continuing other many save pumps not of think lot the just think this Clearly, educate can what applications. it's recovery matter heat that we Customers see a can like case, also for on but how heat this companies of do energy, is other another it in lot only really avenue in unit a

and it's that So that implement in customers one it's can that just activity businesses. their they educating just and customers again, it grab all seeing -- of those about

So -- demand yes, we're educating customers could the -- can like innovations that very unique you our as and on transformation generation leveraging imagine but a leveraging we're you towards team imagine, this. lot of digital activities

Nathan Jones

my And of business. side then the follow-up drying the around

a think with pretty with of acquisitions and decided I Ingersoll can the been and being marketplace? to strategic you you've supply how compression advantage Can you guys some Rand have that making. compression about the talk able you think it's you go to is that drying why both drying leverage obvious for having capability strategic is the the advantage the in a

Vicente Reynal

Yes.

Meaning at good ongoing total to terms, to an you're revenue the to optimizing potentially a work in very multiple the customer dryer system winning to the in simple us that very or is you in can attached you for then you that more really separately, Nathan, proposition is have think, could better basis, a versus a time streams be So if operating optimize the actually same the way that drive X for new a that, us. then create I optimize and and actually can off. suboptimizing compressor systems

for design thing air total nitrogen goes it's a the and really the of So it's to you that again, treatment company one holistic thing just whether oxygen it a at those just generate it's treatments point really we you're or the well utilizing as that believe way it or whether customer, good with for strategy. aligned use, planet a our of good air

Nathan Jones

the customers Do having see -- in capabilities? dual the value that you

Vicente Reynal

about best the again, yes. X not else customer of Yes, have -- can customer solution the else to it, a you're you just then then compressor a and someone sell the Yes. you together. them optimal the and Because between buying something when from optimized X versus been having buy talking

drives optimization better yes. better -- then which the So

Operator

the all questions have are Those we for today.

now I'll concluding hand So back to for Vicente remarks.

Vicente Reynal

the we're in and a seen Concluding, employees I ownership like And excited very unique pass driven us owners owners by investor you. with Thank about the the a continues want and say of and the differentiation which we're Yes. company acting be big and to engaged, performance that just and to I very as driving, our thank to highly all the we are performance company. do in is internally this transparent it's with you our based driven on load of by and and that activity employees our that we as drive well mean very this all differentiation continue what's employees, mindset be on to thinking a community. you. have because be ahead continue culture

with So that, into many you so and seeing road. thanks to as we of Thanks. go the much, forward look

Operator

our now us conference Thank you disconnect your and call, lines. today. joining concludes This you may for

Ingersoll Rand (IR) 3 Nov 222022 Q3 Earnings call transcript