Earnings call transcript Q2 2023

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Operator

Thank you for standing by. My name is Kayla Baker, and I will be your conference operator today. At this time, I would like to welcome everyone to the Ingersoll Rand Q2 2023 Earnings Conference Call.

All lines have been placed on mute to prevent any background noise. After the speaker's remarks there will be a question-and-answer session. Instructions] [Operator

like Relations, call Matthew now President to, turn Investor of Fort. to would over the Vice I

You may begin.

Matthew Fort

Fort, Investor Thank you, morning Vik earnings Matthew Kini, quarter Rand are XXXX President and welcome and Officer. to call. the Vicente Reynal, Chief I CEO me Financial And joining Relations. Ingersoll Chairman second Vice this of and am

on We our the call. during will reference issued our these of earnings section release are and the available presentation website. Relations yesterday and we Investor Both

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

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

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

to and Relations in You presentation of these our a comparable earnings release, Investor available measures of which GAAP website. with of most accordance both are calculated can on reconciliation our in in our the the measure section and find slide presented

to today's XXXX financial highlights update and we guidance. will segment On provide an review company and call, our our

question follow-up that ask caller For session, today's participants. Q&A we to for keep and to other each time one one allow

time, At turn Vicente. the I will this call over to

Vicente Reynal

work for quarter hard like by record thanking begin their I helping and deliver to Thanks, of and would to all our morning QX. Matthew, employees all. good us in acknowledging another in to

our purpose like and changing our despite constantly exemplify environment, to owners. macroeconomic and acting on continue consistently thinking deliver commitments, employees Our while the

with Together, have and to great our opportunity complementary build our industry customers recent a I products would new from a broader spectrum employees solutions. our also providing the of brands, we strong and upon acquisitions. capabilities, welcome, to like

flow. We in EPS XXXX second on while in recently we remaining slide again meet where results, on cash X, sustainability track XXXX EBITDA, and revenue, delivered adjusted adjusted sustainability IRX our quarter, by differentiator, to growth report, competitive we free fueled yet the industry-leading goals. Beginning our double-digit delivered published our

continued we're once full in Finally, again based year performance raising XXXX guidance. on our our QX, robust

As move the to engine deliver compounding key, we how economic our results. is X, growth annual to we slide

in our presented XXXX, last in our this During our Investor growth highlighted We quality of remain model targets inorganic Day and strategy long-term committed of our we Day and to QX enablers. this organic, Investor earning and page. outlined

value around On provide into deeper and innovation I innovative the as iXV. organic product will with you also insights are which our slides, known centered, next initiatives,

provide an addition, progress towards In we will our update goals. on our inorganic

X, slide initiatives. with to growth our Turning organic start we

how iXV as examples leveraged Here, we to products in some have localization we drive of have as growth. organic China, well

new localization CAGR. created product Since Gardner the show organically On and the a all we high-growth product channel Denver page, side how Rand has at expansion Ingersoll of offerings have grown vacuum our end lines blower with markets. the merger, and and on a enabled XX% focus left-hand sustainable

the combination we right-hand recently M&A example of of the iXV. side have growth through On the an acquired page, of and organic

million, development from expand screw over our $XXX at legacy pump. addressable and with is see The turndown go will months. a to vacuum and of competitive products, conducted recently six market side turndown of M&A the in technologies. the Pacific pictures team page, oil-free by you This that product can As event the the event bottom development in approximately launch acquired new Asia a new right-hand of outcome the will

on our X, strategy. M&A Next, continues of be to capital allocation at Slide the forefront

Bandaid the very capabilities is component a of vacuum synonymous almost our a brand technology for also in both XXX This We're clinics same Roots this recently technology. brand consumer M&A signed process manufacturing. of The blowers low-pressure and compression and Roots. expands low-pressure iconic years. in with This our We are to markets. in which recognized thrilled to provider acquire the are steel is way acquisition and leading that business is highlight this brand, in critical technology in green iconic been centrifugal has excited technology. deal And

commitment time several in remains $XXX annualized today, funnel, LOI currently inorganic close our M&A XXXX. seven And LOI R&D. than to funnel date, at $XXX under be revenue Our Based stage. process, the are an seven our we was acquisitions the are strong. continues to the over we at We to stage. M&A larger additional to more acquired million on of to it which at importantly, five have current other as be it transactions to transactions time reaffirming have transactions the in LOI the million And in of

we the imperative On strategic sustainably. our and released Slide our X, recently leads sustainability report, XXXX of showcasing results commitment

very competitive a We in have period to as by differentiator, made our significant time. top results progress establishing company deliver quartile leveraging in a of short IRX ESG ourselves

we North four have of industry-leading including machinery was received Dow the electrical Rand in to as number the the ranked Index Sustainability XXXX. Sustainability the performer being World our Index. fact, In and Dow efforts, America in Ingersoll sustainability one Jones and industry equipment and several Jones IEQ both acknowledgments globally number named in North America

from received at Morningstar XX.X% a of an very XXXX, ESG Ingersoll-Rand risk low As close Sustainalytics. rating

industrial employee while also long-term shareholder. our in aspect a their social improvement More We driving important, opportunity leading ownership received employee economic in increased the rating employees and ESG of from our also XX employee our as way the creates ownership the to in model. with ranked we're among engagement believe families AA leader XXXX MSCI and machinery an ESG category. companies as We for

we equity as has the $XXX XX, approximately $XXX to million million XXXX in increased our are employees This not over end, June in awarded value employees, that have to management that since XXXX. To program. of on equity already

X-year anniversary. employees We the ownership program works after to will continue to offer equity all grant our that new

life commitment, we to our and engagement track Through a on objectives. our are with sustainability XXXX element are critical better making opportunity. employees them meet Our their business begins and of for

our this, I'll Vik With financial now update over an QX on performance. provide presentation turn the to to

Vik Kini

fueled Vicente. by slide company again through XX% commercial delivered respectively. Total a orders X% execution. in QX balance solid year-over-year, Thanks, results and of and X, we organic revenue and On operational IRX, increased

we XXXX was with look start Book-to-bill into gives as good and which higher and it the of we backlog up remain the into XXXX, at approximately to The visibility of is sequentially. was strength XX% X.XX, which and us end and momentum half of the encouraged approximately than year-over-year our up back approximately move XX% backlog, X% is XXXX.

and million, a XX.X%, year-over-year year-over-year adjusted margins improvement EBITDA basis of a XX% adjusted $XXX EBITDA The company delivered quarter second XXX point of improvement.

flow the XX% For as per prior prior million, global quarter up diluted supply $XXX $X.XX, earnings as year. headwinds with was was support free was versus chain continued for cash the ongoing these despite backlog quarter, from versus the to due challenges. headwinds, well Free share Even cash to inventory need year. adjusted up the XX% flow

$X.X upsized of place billion end driven this in sequentially. quarter $X year. at and liquidity the which was in due amended, facility, billion approximately up large extended early took This recently to revolving QX Total of part increase was

lows. both prior Our At net leverage than turns, and the X.X year quarter. X.X turns remain prior all-time better to near we are continues

helping overcoming incident, Due mindset Finally, the and QX our cybersecurity to competitive EBITDA I'd example of resiliency adjusted in IRX. revenue involved incident in team's an is our in all thank effectiveness was employees like within the differentiator, impediment, This us and of the the were the and to of task, mitigated quarter. risk QX. would highlight that with power results the ownership associated enabling the our of to this to tremendous I small no like deliver to overcome

X. slide to Turning

and basis XX%, from segment on basis. For the points, Total the company FX-adjusted EBITDA the XXX increased basis ITS margin an total prior increased revenue company, adjusted grew while QX orders PST XX% The margin points. year. improved XXX both segment increased XX%

support incentive areas remain for both at in segments generation dollar and costs as in to investments as our growth IIoT inflationary demand price of compensation headwinds. the adjustments. margin of by actions million Notably, Corporate the positive, $XX came impact speaks approximately continued which like to driven despite well quarter, persistent the nimble teams and cost

per up interest tax year-over-year rate And $X.XX the from for $X.XX expense. adjusted increase includes XX%. the quarter a per was headwind This Adjusted to quarter diluted the share $X.XX finally, earnings for XX% share. was

want that company Moving highlight first-time next the Fitch. I slide. from to assigned an investment-grade on issuer to the was default rating

rated ratings all across received rating We remain investment-grade our have investment-grade to major rating we three and committed from two agencies. an becoming now of of the agencies,

our billion facility. cash Free approximately million. Total $XX including billion million, of liquidity on on quarter billion $XXX availability was CapEx, of $X.X which the credit cash and $X based company totaled revolving $X.X was flow for

$X share and M&A to $XX outflows the million million for million shareholders in $XX deployed quarter and to in million through $XX included dividends. returned Cash we repurchases

priority remains continue our usage of expect M&A M&A foreseeable cash for future. the top be to we capital and our to our allocation, for primary

to continue have growth similar past acquired M&A have size, in scope of the primarily healthy funnel assets This opportunities. nature active over funnel and relatively an We two we inorganic and of years. bolt-on consists the to to three

our now segment turn to Vicente will the back I to results. discuss call

Vicente Reynal

Thanks, Vik.

margin the up Service points pricing. our increased XX, growth segment with year-over-year EBITDA with of prior growth with XX.X%, outpacing an an year-over-year volume XX% of Technologies of organic adjusted XX% XX%. Slide and incremental delivered EBITDA Industrial On year strong basis Adjusted revenue slightly from margin XXX

continue of see two-year Note for grown products and to with a X.XX. orders organic We that book-to-bill have solid our organic X% orders ITS demand on a up stack, XX%.

FX, up was revenues. total low approximately both of the orders orders of percentage individual on categories. with in we the compressors, Starting across negative the to Each headwind year-over-year product and a which the segment digits. saw double figures Moving impact X.X exclude the point

We continue lubricated oil to outpace free product products. orders see oil

on-shoring that to momentum up near-shoring well North on as the investments were digits Americas, around continue continued energy low up in with digits, secular trends demonstrating America as we from Orders low double savings. and ESG, double also see

Asia deliver in EMEIA in continues a solid great China execution performance driven market continued the demand low digits. up the where orders Pacific they saw above order orders to continued single with our high team The mid-teens, by in up growth team from with be XXs. to

every in showed region digits. up good conditions Today, up tools was orders self-help mid-teens we how the single our China continues and were strength the power to Slide orders and blower with market an the Orders of team from initiatives. positive low lifting and in saw Vacuum outperform on with X, own business Europe. example

the product high-growth, portion portfolio oil Moving to a of our action and focus This with Netherlands the how we're a shipped and startup now process, an tech and illustrating system markets energy manufacturing. first a clean to compressor EMEIA. our in was the recently continue end with is team unit build perfect in the collaborated on July. we hydrogen innovation develop region-for-region in innovative sustainable launched slide, for The of EMEIA example to free hydrogen

X% Science Turn XX. the Precision grew to Slide and Technology Revenue organically. in segment

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

the margin price not businesses, platform. on important first half cycle in repeating primary driven orders as and is of related in year-over-year decline the primarily XX% times. The of did like science EBITDA second businesses one-time year-over-year decline organic Agritech were with X.XX book-to-bill the a of as year. The the adjusted lockdowns by the life orders of the It driver is frame in that Seepex, the the synergy the book-to-bill acquired orders in improvements, well not which to delivery for of repeat. larger longer China Organic note down improvement cost to order expected quarter was XXXX, impact of

the business and that ship believe very solid, remains healthy. was Our within and core we PST book business

technology robust used a action, design and in life sciences innovation alternative chemical innovative PST market. peristaltic treatment, pump our For This that industrial dosing for new for water transfer we're applications. product highlighting and is provides

brands, water while each the products Leveraging our market products execute strategy both for strong application. LMI Albin million. IoT-ready continue are treatment customers choose best already over and across the expanding chemical of to multi-brand, multi-channel The technology Pump this complement our and offering we portfolio and our by to technology opportunity for $XXX applications addressable

slide to XX. Moving

we're backlog, Given in XXXX momentum raising guidance. the solid the half our from performance first and continued again

experienced EBITDA QX you of incident the an half $XX back recall, approximately April. QX adjusted may we to into in of guided As year due out the the during million of we of impact and late anticipated cybersecurity that moving earnings,

mitigated the earlier, significant to Vik back As and no EBITDA quarter been is or pushed mentioned this revenue risk within half. now adjusted into was the have expected

expectations the on half increase the growth in the the improvement the page, the side commentary year. the the included second year full additional of outlining outperformance from incorporating in organic bottom impact some of We have in right-hand QX and guidance

company versus between is anticipate full the volume guidance. For is growth basis which revenue XXX year, our approximately and and is overall to split a XX%, We previous to of XX%, X% grow total XX% expected organic where point improvement XX-XX. price

FX slight flat a is a headwind, on now be year full however, expected to approximately basis.

M&A approximately as million. from This the completed Our $XXX has reflects of M&A $XX and revenue impact million transactions August XXXX. from all X, to increased closed increase

initial X% Corporate costs throughout and guidance range be is prior $XXX guidance. for up and million planned versus up the of EBITDA and will the $X.XX relatively $X.XX adjusted billion, company evenly billion are X% our expected quarter year. incurred at Total in be is to per which versus the

the EPS which have been midpoint. guidance as tax $X.XX total percentage revenue, on spend table, the with made both our interest adjusted guidance. all of the year-over-year range within to up expense bottom changes the is and of at XX% be initial remain line is the projected a $X.XX, to CapEx in and or prior No At rate, adjusted of

XX. slide to now Turning

want call, strong in to Ingersoll wrap today's we Rand I that remains As position. reiterate a

results record nimble. and reflective our remain deliver guidance is to backlog We performance of momentum. QX continue updated and We our ongoing

that market the We may continue and prepared challenges dynamic conditions, for the to monitor we're come.

the employees, our of owners each I you to for the impact you show of These year. results thank the excellent first To half have of that as want an company.

remain go, action. Thank focused engine still growth your hard work, IRX. executing use our commitment a through to and need economic to of way we're focus for targets meeting long and to on we financial our our However, the resiliency continued and you

deploy we of our continue outperformance, the And strong invest balance market strategy, and our have and as highest capacity remain capital with with record allocation comprehensive disciplined to resilient As return. capital sheet to as we our track the is ever.

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

Operator

comes [Operator the with first question Instructions] Our Halloran Michael of line from Baird.

line Your open. is

Michael Halloran

Hey, good gentlemen. morning,

you essentially quarter, changes just have can and negatively, the cadencing talk trends underlying or maybe saw we on So through saw you demand focus where the would underlying a -- how any expected commentary level? positively environment is about how any or on sequential an the you

Vicente Reynal

to is saw what up the kind that lower well. on of very say, we quarter, I'll cadence saw we month Yeah, Mike, the always sequential see, which happening in and ramping through quarter, the we pretty typically comparable one and starts

So nothing color. we that, out different will call of anything

those to momentum So -- which that obviously for continues to show that always engine. demand about see the good there is the more particularly is good see. across the to cadence that generate us qualified encouraging that to and And leads leading and marketing our momentum generation lines, is continues product pace talk we well as indicators. we important as And MQLs, with which sustainable

Michael Halloran

the and those help And orders little just in those some the X the put to exclude here it side little you how understand track of not Agritech repeating. a But things pieces. can bit side, maybe sounds in certainly markets? projects, from I order larger of like bit. a on when of PST context the And some expect you trends on are you recovery and healthy curves those orders

Vicente Reynal

book Yeah. business, and think pretty on in this concentration very we our the get saw we that And that which that business we we're the well. Sure, of remains happened could in last large business. then said I of short lumpiness to strong side to turn Mike. that kind what the similar continue quarter the it call of last excited it doing in I that is first mean also spoke Agritech here kind I businesses projects we what oxygen some with what not large of think I some just the orders and of year, quarter, see business the that cycle the you mean, with it was year. frame some of year, you

So very stay that, we encouraged. I I so with guess to think continue --

mid-single-digit over PST and the cycle be to that mean, continues to definitely over in the time. see there's trend no the plus. deliver We segment I that

in team and in perspective there's PST So change achieve the we with continued we no momentum segment, of can here PST here. the what that anticipate long-term

yes. So,

Michael Halloran

Vicente. Thanks,

Vicente Reynal

you, Thank Mike. Yeah.

Operator

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

is Your line open.

Julian Mitchell

first just see much. Good between you how very of that sort Thanks the of morning. half question around Maybe playing out and X. split second QX

the into standpoint? that up each think much guide there's of segments being and sort between XXs but big from the I any embeds low how ends of two are just wondered if weighted figure QX about EPS that difference quarter,

Vicente Reynal

still a I'll EBITDA we Yes. as a lot adjusted as Julian, segments, including mean, And grow low And grew of tough think revenue like difficult. QX ITS margin double looks the remember is ITS, last total about a example, comp of to increasingly and organically. year-over-year I XX% that impact the on expected on year, Rand get QX basis, comps digit, revenue we QX for for for where and more Ingersoll say at think M&A, QX. about that reminder,

of still kind in margin of level comps. about digits. And see good as XXXX a we XXX PST sight But of on expected be that's XX% and in those mid-single tough margins ITS. we expected is So points into line reminder, of growth to to to expansion what a of about basis again back QX of EBITDA. top that that's XX% grow talk And

Julian Mitchell

starts bit those here Are flattish as helpful. shorten. just thinking sort about to drift the in and That's then sort and back orders a just And trajectory lead thinking Thank orders backlog maybe you're sort half of times firm-wide then when sequentially, across year-on-year businesses. of from we organically very the you. of secondly, backlog down the both

of bit? their And can a orders customers adjust sort little so

Vicente Reynal

But don't I a prior mean, toughest reminder, as we for yes, orders. again, orders. specifically year X probably on Yes. of the guide our is clearly, QX comps Julian,

growth last QX solid. was recall, I year so As XX% organic order very roughly momentum,

the fourth kind we think most the than we for half of I'll projects a being larger little do bit of had been greater as orders orders second booking XX out I in is the say, getting a in back speaks in we're again has the and normal backlog to to booking I shipped mean, the that, of than past, -- obviously the one reminder, quarters, half in the book-to-bill due quarters of which greater terms larger backlog, a cadence due in -- half Having anticipate the mentioned as seeing In past in nine comps longer first one first half of those and drift down that a to book-to-bill predominantly said here. than the less kind we one, the so to quarter. typically

Julian Mitchell

Thanks much. That very makes sense.

Vicente Reynal

Thank you.

Operator

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

line Your is open.

Jeff Sprague

Good Thanks. everyone. morning, Hi.

Vicente Reynal

Good morning, Jeff.

Jeff Sprague

you kind a just energy you and And case? more can ESG ITS and But and Vicente, bit a elaborate that side, b, you're pointing little those ESG? you your can investments a, sort good two guess compressors in on the of Hi, I buckets? efficiency talking the is of on morning. elaborate seeing what you're retrofit. to about little in particular, demand reshoring on bit in noted

Vicente Reynal

Jeff. Yes,

saw growth we're kind and momentum that outpacing on the very and line, the the I particularly, absolutely. that you compressor of product we that we saw high XXs was mean, oil-free on again, compressor that the pleased oil-free. So momentum with saw

of that core see strategies actually we launched the to one and that exciting very fruit see some continues very, to growth. So

on that conversations that customers return again, that In is we the ESG, quite and we momentum continues. to investment have resonating the see terms -- energy the savings, on based continue well so with still I mean of

air ago, the doing. audits we Our that few spoke about earnings we're

before, us a for do that of faster clip and leading that's as kind of data good ever we continue really We see lot to than driving a forward. at moving points

that is have India, yes, Mexico, we're locally. this And see talked the well. as Buffalo reinsuring is reshoring, here But a their of also reopened about expanding that team And I really happening it, some expansion strong you we in because very whether see capturing as in chains but more it well Mexico too from it capacity we good as momentum reallocating supply think we and in a in lot also it's clearly, of well. well. at there to reshoring China seeing companies we time, that's U.S. We near-shoring kind as see in or a about why

So good compressor of we in core technologies and systems. the the see momentum in investing really here, companies particularly

Jeff Sprague

And creates you growing? end. color that a us if on could service as imagine process audit the customers on through service quite percent I at Where of And on attachment an and revenues? give how air opportunity would are stickier too, service going Vicente. back that are now for maybe is you little a the service

Vicente Reynal

Yes, North said of solutions, seeing team XX% better particularly these America statistic XX-XX, that. momentum good accelerate we've but equipment, really we're And roughly in team service -- new the see Europe leading in and Asia. we Jeff, incremental XX% we in terms to Packaged in in of is as the absolutely. the revenue. momentum well in lot now are a and team our leading spoke also And kind continues audience, a Care that about before Care seen we that to to actually

particularly remote strategy devices front more very to be be recurring to continues monitoring to with this we yes, compressors here. able and and connect our and center revenue capture as more in So continue our

So continue momentum be actually yes, come. to good see we that to one we a

Jeff Sprague

you. Thank Great.

Vicente Reynal

you. Thank

Operator

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

line is Your open.

Rob Wertheimer

Hey, good morning.

Vicente Reynal

morning. Good

Rob Wertheimer

up APAC on compressors I you think Vicente, China, mid-teens. touched orders and

comping think I mid-teens. that's

a to that? has doing? good broader on position your And called team just you kind elsewhere China there of that's done think the job particular -- you're I China I end we've the efforts be strength if I know industrials. in expand you. And then there don't the and there. general, market in Thank Is so you know in any drag adding seen market out can

Vicente Reynal

could pronouncedly markets after mining than about you growth as because those lithium, more electric seeing you that like in said others the think and I as think that, battery there's in kind production, definitely we're too, well, to change Rob, But it lot end we're well markets. strategically continues a things of that. going vehicles, of Yes, some very

seen that see And from the are growth, market to pivot to spurt the what core that very think X other is some ability to I to the starting growth for nimbly end doing. the team that of market us I end think very what has is is

addition In is kind lot Denver think is the the vacuums what's of, combination I and call really where to Rand a the blowers company, products that, Ingersoll it, Gardner and of Gardner the exciting China Denver accelerate the team leveraging of legacy to in growth. of

And on this you kind XX% CAGR we product core technology. line saw that's, revenue organic X, Slide and of of how as see this on

So morning is all was actually in was China. chatting as I'll this on yes, driving, cylinders with firing say, the our leader team I I

review technologies excited. actually product He's doing a our and their -- at he he innovation of China was inspire was in -- and living new center the and team actually super our with was

tough So just China. good happy in this team, a again, to it's performance how the and continues navigate very with team environment solid

Rob Wertheimer

Excellent. Thank you.

Vicente Reynal

Thank you.

Operator

question of with next the the And comes line Kaplowitz Andy Citigroup. from

is line open. Your

Andy Kaplowitz

Good everyone. morning

Vicente Reynal

Hi, Andy.

Andy Kaplowitz

markets. cycle. dynamics versus XX% that, historically, stronger a much business could I you sense one your of cycle end long is give more you've short XX% color little strength in order cycle than had into currently short cycle compressor Vicente, us the The in the think,

give most right or us detail order some driving the growth could you If now?

Vicente Reynal

instead being maybe Andy, But dramatic XX-XX, could dramatic maybe mean, it potentially? say Yes. would be of in change. a I not not I such a XX-XX, way. Yeah.

long to So others the of I level the technology, and difficult is penetrate. we to with what the short, which of for momentum see be oil-free. performance on more we're Oil-free, good the very tends think happy higher

So more product in we we to main see still for good we way. a continue continued market growth a and share as a see this take momentum as line that

Andy Kaplowitz

XX% just versus despite XX% like forecast tweak, is versus That's I and but And previously better Vik, your XX% incremental to year versus lowered of then actually you first would helpful. second it for anything QX, the beating a it's in margin half cost you the I think price imagine to the getting looks in margin half.

into So give what seeing could you're more there? us you color

Vik Kini

Andy. Yeah, Sure.

think like we part in I cost, the in of before, were pricing said very question of early we terms on price our actions. the your last

I we call a I expectation how the half is were change. think before. that right back looks meaningful fairly now, the guiding comparable to wouldn't

you M&A. In was A deployed of did put increase it's that out of on call couple just some saw the capital note, tweak. that, We there's just the minor tweak you things cost. margin terms have it, slight as of that did -- a corporate some to we to

about have So we minimal did actually but that to that excited a in base base the future. say acquisition right we're now, revenue very technology I'd we completed QX for one the that cost

continue look in growth around to said, I to And growth when as we're So to Vicente the organic business. perspective, going mean, invest from again, an else you there. we've portion invest we in whether in perspective always said, put those to resources in going or We're two that's out-performance the probably meaningful drive as the forward. Asia anywhere continue world. it be to as

So opinion, our in think totality. or from in we way we've look at where guidance. prior change in But of terms the meaningful I again, nothing been it operating that's a

Andy Kaplowitz

Appreciate it guys.

Vik Kini

you. Thank

Operator

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

line is Your open.

Nigel Coe

Good morning.

Vik Kini

Nigel. morning, Good

Nigel Coe

for Thanks the Thanks. question.

at kick-up and XQ much normally volumes. looking makes XQ feels the a XQ wanted in you This embed doesn't second just a margin margins sense. like Just talked XQ, substantially which take question, the guide crack I of higher about on like are half different maybe to think

of that's correct just in me. But XQ? like math much So is it wondering what are don't we -- have wrong, you XQ. for please does Maybe my seasonal uplift expecting feel a

Vik Kini

Sure. Yeah.

you've So described is QX correct. Nigel, way I think the

If about comparable earlier to look will ITS think you Vicente fairly said, I QX. ITS think as

nice that expect expansion on level, the would to being specifically for to still margins a side PFT Now on margin QX. we And basis. embed XX% back that in would said, year-over-year get that

going side different. company components, a what be to it's from the Now the or on quarter year. to historically. individual in you're actually the perspective looking of That's the I is no it Seasonally, strongest equation, the seen total you've comparable whether QX fairly think

So you QX QX. respect. I will margin see prior But in our different from there a the slight included guide, guide in expansion QX is incremental than uptick to seasonal that it's say not dramatically would

QX one the it the said still, here we about particularly what remain as the on and we still on earlier that's note about the single to And as of, got look thinking to to potential sit upside expectations, QX. questions in in like probably we we some back volume I of would half prudent volume kind I the think, the source the thing of acknowledge before, cadence, here, specifically terms we're think guide of continue organic side. we probably And

Nigel Coe

fair. bit called Okay, into seeing strong, remain vacuum then in taking okay. not -- And just weakness semi, vacuum the trends a But industrial vacuum, of here, industrial. weakness but think not that. really bit out Copco I compressor. wiz you're little That's obviously but also a of in And

any and in markets? So a there of there. be compressor would reason any couple? vacuum curious signs are end weakness your is you seeing And developing of why Just

Vicente Reynal

a of whether at what when of say that the vein, call Yes. that is rotary liquid vacuum, bigger say And rough total vacuum we segmentation the have that. you I technologies, spectrum kind industrial ring. market will we Nigel, would look crew I vacuum of it's more

brands. not also but say will have technologies, great only we that So, we good

the I'd market, from what we're say stability seeing. terms seeing we're in what In of

You compressors vacuum slightly different plays could the the pay. will where sometimes industrial industrial argue that

to from chemical industrial view, and petrochem driving my like again team nature. what processes happy very our many with on that, times But we're continues technologies. the vacuum of So play or things here new that and self-help in initiative do very pleased will things in

five even only spoke of team Europe that not launching also mean I share. technologies, But on now to technologies well in some to again, what as is more the about are China capturing we start team that slide new doing. on the there's

performance with the is So, that I'll team very, of say pleased very the driving.

Nigel Coe

a lot. That’s great Thanks color.

Operator

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

open. line Your is

Joe Ritchie

morning Hey, guys. good

Vicente Reynal

Joe. morning Good

Vik Kini

Joe. Hi

Joe Ritchie

but businesses, really across there's just weakness. questions on good seeing Nigel's a real Maybe just you're channels. are across right that order trends focus along their following now companies know your destocking that around seeing I potential

maybe on just kind about businesses, your of of channel from you whether your talk And see risk so to business cycle on a piece any to today us shorter maybe perspective? just any --

Vicente Reynal

maybe say buckets, with PST. the the start -- big I'll and Joe, Yes, two ITS I'll obviously,

the really side, of customized of lot ITS say a ITS product applications. I the product the to is -- the On that we the in have majority specific

So, those have on stock it's really to least in to at the of of our very shelves. kind compressors technology difficult

It's that have. the channel for working basically capital high network distribution we

that. time, of have very same what much have visibility So, we don't and they we channel and a to At the of we loyal access have. see inventory levels

a bit monthly the X PST plays least particularly national we on And more side, in national what those, in sell the the PST at distribution, on industrial that distribution, US a maybe on and will little call cadence, On sell track be we the very out. here.

much of how to selling visibility out. we much channel is and on the selling have that channel So, how a we're

of entangled we proactively trying overstocking, to getting that least like the with. shelves to visibility available is it is the be destocking the we're level situation whether just or It's overstocking. always prevent somewhat at in So get a don't and we with that inventory

well. I So those destocking. to to in carefully, not note sure terms been of I'd seeing from that it major we're because we've there that -- as of we're proactive material lot that think again, was do perspective of a fairly making has trends of watching But say overstocking nothing

don't helps, maybe I a -- color but that's there. that of bit So know little

Joe Ritchie

to but I No, great. the ask much, that's had I question. figured as

So Vicente. guess, this is opportunity. really question what Maybe applications a hydrogen more talk the this opportunity, oil-free want the are into maybe dig about opportunity specifically of there I little to color, the bit then And, compressor that's follow-on kind helpful today? what and

Vicente Reynal

Yes, Joe, now very be a is this this, growth has center India. to exciting that is we I'll in in and of vector market that in considered say hydrogen an one India. engineering compression one inside I now the facility testing to have be, our the in mean, opportunity India very, good the of actually companies India a capability systems. going Hydrogen we think, only in We're

is we're expansion ones spoke in reason lab and that the to the why which the India we're happy the the call, about with we prior happy time, point technology be the we're doing. to largest in this So on be and center at earnings first,

huge stages put not of on what size we're I it's these In trust market We still I mean, going saying, it to don't are I'd terms early to want mean, this perspective. market are think call. but obviously, dynamics -- I kind sizing, markets, the say kind from here numbers at of of if you

Day, team company is give again, little one. the something I a opportunity color closely India definitely technology with Investor work on that on think Europe actually this exciting bit we'll really unique. that and the to in was develop super But able pretty develop a more to one this in you

in kind this it of the requirement was company. the And that required that by achieve we could case, were company technology this only performance

investments the for make volumes play the to we make in in So us again, and that in it we investments we think continue that future. to continued well speaks will R&D that technologies

Joe Ritchie

guys. Awesome. Thanks,

Vicente Reynal

Yes. Thanks, Joe.

Operator

And question line your with next of Chris from UBS. the Snyder comes

open. line is Your

Chris Snyder

you. Thank

is So QX edge? where all you tougher and comps understand across deal place obviously price easing. on is three half look geographies. contribution geographies, the any really But And one the the of year any into showed a strength three good softening demand that at see leading when are or getting back these there you I

Vicente Reynal

were in from second into momentum days the in that demonstrating MQLs our we even mean, we July, that that quarter say of as an the be or note We're I here seeing I'll think, are there look Chris, that continues MQL showing. sustained month perspective. I -- to early

as you of So we has Again, quarter. it's maybe, as will tough or end that seen noting dramatic view said, I we a regional that the third comps highlight decline. think, specifically market into go

if last think I mean, hefty close double-digit I QX XX% teams, really of orders the like growth had America year. I of to remember in ITS,

But So like think having quarters. I I have comps about. that, that mean, are we growth been out we of for perspective, organic it revenue double-digit posting XX said the the in X I -- talk difficult those mean when you about think

again, of perform, they the to control. So But can and team we tough execute about continues what that's kind what comps. control talk

Chris Snyder

I like separate to with Obviously, the tough sometimes that. appreciate comps, trying No, …. Yeah. demand you're from

Vicente Reynal

Yeah.

Chris Snyder

…growth.

all color. that appreciate So I

And burn on back you. basically off expect year, the if the still first In half in throughout prior little up guys little guess be is in the backlog flat year, trajectory. Thank I generally you But to about talked the then, better backlog may expected half, add that. just that's running the half. kind year-on-year I we know even still any do bit like back of quarters, following not than you months a to the feel -- ago? does demand building burn six exit a

Vik Kini

Yeah. kind And as When Chris, be with year, consistent what our you're the absolutely we backlog into expect came we now, messaged of I right. right the is fairly towards flat look we expectation think the we've largely before. to of did year. end

see kind in the think, did explicitly drift book-to-bill half first of one you'd mentioned of we build then I But in the half above and as down, earlier the that second that, year. say Vicente backlog

now, expectations the the also half what backlog, seasonality, level our on very we're don't that's for of second typical I that seeing based but seeing year. of with, and respect. anything the our cadence, what I'd then the in consistent think in And kind given typical of we're say, changed

we guide. think terms a year in that's flat of expectation to I of of upside good the I the that backlog in to the QX volume point think as But equation, end the particularly continues side, in do time. the said an point was be opportunity more being still -- the year this compared fairly to where organic maybe started, side the on probably before, at To in there at

Chris Snyder

you. Thank that. Appreciate

Operator

O'Dea comes next Joe from question Fargo. Wells of the with your line And

open. is line Your

Joe O'Dea

Thanks Hi. morning. Good taking questions. my for

Vicente Reynal

Good morning.

Vik Kini

Joe. Hi

Joe O'Dea

Hi.

So the half, another XQ. the like and at similar we're set seems but half the quarters, back just and growth, volume first, price is organic, back dynamic up one organic the looking pretty XQ it within on way between

it's of curious, and Just in we're back half? volume about at terms really point that thinking in of is growth if what pricing comps this kind the

Vik Kini

half. I terms Yeah. Joe, would probably similar back QX about think the it to a if thinking on we and said, I the of revenue look particularly on like you're the will side, ITS you do in think if bottom-line. fairly QX, look way about --

you about individual. two the the think to kind to way quarters it want of think if I about think

QX. last bit QX the year, end I of organic growth strong of exceedingly will a Remember, we think had in ITS. be than side probably the year, QX little particularly healthier in an

of think QX I was growth excess in sales ITS organic XX%.

the of to of in I'd that your normalized from of quarters, price So half. point, we timing again, continue lot see to timing due expect just, to, do frankly, A the back to aside increases the say, between the took is we kind pricing in year. prior when the

we anything continue lapping don't So in consistent that. very has And ramp we price original to guide. a with would sequential on what kind we are end. down now but our really terms think expect on I said basis, of of see that to changed

continue as we opportunity the some successive guides. there's side, with up-tick expectations guidance the outperform of note our our again, half, This to different. there, again, volume volume on to back for And we backlog, And volume, then hopefully QX. the slightly about no each think is

Joe O'Dea

Vicente, ability And approaches that And to of terms and the I Got kind sort identifying was position just think growth. it. to your pivot it. to internal curious, interesting the how to you question then, I'm to of in try response advance growth Rob's of of on in

today out about goes? you're I anticipating growth? the what not And So think of but being it's in terms well-positioned kind how far what for of puck, that you that. we of much for doing mean, what so chasing anticipate just can

Vicente Reynal

are Yeah. right. Joe you

Joe O'Dea

How far out is? it

Vicente Reynal

good But is people love team us, I No, that question. two we I have one. team mean, we Because trends. like Yeah. in team trends the our of seeing a we're team of XXX-plus of for early a like sitting of are growth. have actually here -- a And corporate analyzing micro that potentially kind vectors currently offices indicators we're becoming these that

with time production recycling. to potential looking be a you one will lithium come new battery need and avenue recycle. at going electric trends. that's I the batteries Clearly, example that lot one to early. lithium of battery vehicle could on So there's a how mean, production, so We're give these

early-stage looking we processes incorporate our and in a development incorporate technologies can can where of already and the products. that finding we're So at we the actually those lot technologies

the have how to get I to those as early go think how then every expect trends again, then team, like the year, resources And one better we seeing. trends. I mean, and That's customers start technologies. and close our closer a be demand at any mean, understand that to pivot to of team obviously, you to it. end country we're help can on to kind early about -- So those then generation those can participate we're reassess kind China, of attacking XXX and leveraging just early analyzing those and we markets demand we're and of we about micro in to generation with do time, we a to example we see it, higher of able indications that And growth and point that

Joe O'Dea

you. Thank helpful. Very

Vicente Reynal

Yeah.

Operator

[Operator Instructions]

next comes with Deutsche of Bank. Nicole the Our question line DeBlase from

is open. Your line

Nicole DeBlase

guys. morning, Good Thanks. Yeah.

Vicente Reynal

morning, Good Nicole.

Nicole DeBlase

to I thing Europe. I think I slowing want into about there's among investors potential guess concern one mine just is that been dig answered have of in Most but today,

could just I pretty it little dig commentary Thanks. a on what So you're well bit seeing? everything sounds from if we mean into like your is but going that there,

Vicente Reynal

seeing. whether perspective It of can by is hydrogen see Yeah, actually think in growth the is nuclear seeing driving how the we're as that of the the -- push I facilities self-help and total technologies is the and these after mean with actually technologies that terms outgrowing -- again, always or us LNG help in mean France, of kind whether ourselves. it on of put in I doing to helping our market that. in good going that definitely finding it or refocus say we're that the like Germany. lot revamping some Nicole, I to the I'd How focus vectors in doesn't momentum. momentum we're that continues a same market But to we're of we're

us level micro the we on for that kind best achieving to kind So get of of way decipher growth. for to that variance be able

can out that very we this on So economic trends leverage in we that's obviously, things like excited of follow think we engine view demand which we're put generation that why the growth secular and kind IoT, in how accelerating. a going We've field feeding we're harvest in work we're care do we machines. and because lot machines new all of been to connecting how of terms packaged and that that the now service recurring

multiple these that little momentum you for us. as can find create good there's of kind all growth add So of growth a where kind places good of we buckets growth meaningful of

Nicole DeBlase

Understood. Thanks Vicente.

Vicente Reynal

Nicole. you, Thank Yeah.

Operator

no this questions call you. are to back over Mr. there And further at the time. turn Reynal, I'll

Vicente Reynal

that execute, would like to said, IRX, just to for know their we're We're our counting being differentiator. I And rooted ownership you. unique employees be another all Thank we in hard as to end is and we again Yes. counting acknowledging that continues QX. us thanking on deliver of team model. quarter our to by in record continue our work, helping to IRX our

So again, it. our appreciate call you. thanks to Thank and listening for

Operator

this And concludes conference today's call.

disconnect. now may You

Ingersoll Rand (IR) 3 Aug 232023 Q2 Earnings call transcript