IR - Earnings call 4 2023 | Ingersoll Rand Inc.

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

Operator

Good morning, and welcome to the Ingersoll Rand Q4 2023 Earnings Call. Please note that this call is being recorded. [Operator Instructions] I will now turn the call over to Matthew Fort, Vice President of Investor Relations.

You may begin your conference.

Matthew Fort

Thank you, and welcome to the Ingersoll Rand 2023 Fourth Quarter Earnings Call. President Relations. Vice Fort, Matthew of Investor I'm and And Chairman Chief and me this yesterday Financial the these Vicente Reynal, morning are afternoon, presentation CEO; and issued earnings joining will call. our reference during with Officer. We release we and Vik Kini, available the website. on are Relations section Both our of Investor

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

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

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

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

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

Vicente Reynal

finished constantly I Thanks, us results despite helping deliver acknowledging all. and year employees Matthew, environment. full fourth changing year good begin a hard morning in macroeconomic quarter on with work in strong another We would by for XXXX. to like the to the high and and year their thanking note our record

we demonstrated in was also double-digit at against from and whom to impressed Investor spirit had years. Touching this recent by to continue entrepreneurial Slide again for the technological mindset made reinforces EBITDA, acquisition of XXXX, outperform our company I week new chance grow the commitments very impact adjusted employees past ownership adjusted X performance how CAGR our has our Our flow. welcome an growth on with Ingersoll over X. the last revenue, Italy. would XX% Rand. I organic EPS the to employee we In has and cash in like impressive visit Friulair I XXXX long-term that of our free Day

spend solid. As we to to and this We results X, ability Slide November through of how IRX recently our and while past commitments. that XXXX, macroeconomic highlights Day And I'd move our deliver agile we engine. we combined mind, our a highlighted demand and be control. we remained Investor held of focused like minutes we uncertainties execute on providing presented. On to what we And the remain continue our on geopolitical is ownership remain we growth confident everyone's top can our model, couple to competitive our with a important differentiator. economic compounding at few in

use our have premier we have IRX, underpinned created durable model. the a an With increasingly profile, the growth we XXXX, employee of ownership transformed into compounder. Since company financial by

into billion divesting well $X.X to cyclicality sheet sustainable and positioned build balance our markets. Today, acquisitions on end date. reduced than accretive our our Club stronger HPS and upon and reinvested through businesses to have Car We XXXX, enter ever, focused progress we approximately high-growth is

for both also market markets our show of and doing product $XX billion we Moving to inorganically. On to share X, multichannel, and foundation planet to we delivering exceptional combination how organically highly growth, for and our while financial The currently commercial the continued operational the the an demonstrate grow community. footprint of committed unmatched positioned installed we massive base good and next Slide provides remain performance are we market within multi-brand page, portfolio, strategy, addressable share how we play. asset uniquely fragmented

to leadership share. our recently Also, named and industry, commitment in news standard the of prior process as side for ranked annual announced to environment in left-hand and world Ingersoll Ingersoll Rand that was environmental corporate CDP. CDP the #X On S&P we the for the from Rand first within very A Global exciting List up recognized page, by year. some the scoring tackling climate is its globally in disclosure the global to performance gold transparency. change have

XXX the our employee we Finally, and our increased quotes make our catalyst the employee well industry center for XXXX show higher goals, illustrated the that a for side side progress, life-changing which the way as their Slide left-hand right-hand as page, we're have is the shown ownership to the on we employee massive already ownership highly shown as many aggressive the And engaged we employees mindset. been the And our engagement. of them. model on achieve page, from as We points on satisfaction an with some on our drives a base economic of and to the basis the created continue than families over towards average. them. On opportunity on progress X, of employee is combined the believe expressed for has of page,

next provides this you growth of all is our that our the slide, long-term of through All evidence factors these leads see durable engine that combination economic model us where can executed to the performance.

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

company to enablers XXXX. passed, XX% In delivering organic growth growth. We our through growth margin also margin expansion growth our growth year-over-year organic average, you growth as our M&A. The surpassed only In-Year basis of points delivered in organic we we to And And leverage EBITDA deliver, mid-single-digit growth adjusted combined of we XXXX, then but XXXX, also from we commitment and this revenue exceeded double-digit outperformed of a again, to each track our can targets, sort delivered X% we expansion over X, inorganic on previous a XXX initiatives, our IRX, In schedule across week, again growth on expect Investor generating our organic commitment. date, EPS as far and prove XX% low see, cash of adjusted XXX XXXX for a margin ahead encourages the metric. With results on of IMPACT of focus differentiator execution. XX% XX%. are premier or set high-performance growth long-term Day. our our targets of sessions management compounder. On culture in our surpassing XXXX, and IDM, competitive daily this targets strong flow at we're we Slide These free that delivering durable or and

give our that have We financial on targets XXXX aggressive results targets those cycle. set confidence delivering new in long-term over for average the are and us

both invested technologies addressable while XX. acquisitions have Slide market close forefront the adjacencies. $XXX products accelerating million to of strategy. capital at continues in market-leading XX with M&A and Turning our allocation be These acquisitions We been over across to our XXXX.

XX of under As today, we transactions currently LOI. have

was strong M&A at remains time Our RMP. funnel larger than the Xx to over be it of the and continues

size additional LOI transactions expect The in We are to past similar the XXX currently we years. an nature revenue be the bolt-on basis of points few XX annualized XXX over have deals under inorganic to in XXXX. acquired and to done

However, an over now to outside have exceeds a where to of the performance. LOIs, our of turn $X presentation billion. I full still follow provide year in Vik couple XXXX QX update and deals on will the the XX we these financial purchase price

Vikram Kini

delivered and company of EBITDA we flow increased We with nearly execution up XX, balance Slide constantly Vicente. a XXX of sequentially This X% of which a flow company orders commercial delivered our margin by QX. $XXX strong our backlog was X% year-over-year, XXXX $XXX a entering million, up basis a Total guidance. The and and IRX and point improvement improvement XX% QX adjusted the presides Thanks, we cash adjusted organic environment. fueled the the and for from XX% finished was gives changing liquidity Free EBITDA XXX year revenue sequentially. billion in cash conversion an adjusted operational revenue and end by with $X.X a a through XX.X%, point flow free remain encouraged to the delivering us XXX% backlog, the respectively. on at million year-over-year Total basis On $X.X and quarter of us year-over-year and over of despite for income. conviction approximately free strength full billion year fourth healthy million, quarter is macroeconomic improvement net $XXX X% year, to execute of margins year-over-year. XXXX in quarter cash

sequentially. and X.X year continues Our both turns, X.X improve prior turns turns prior leverage net and we year-over-year At better quarter. are to than than at better X.X

Slide to Turning XX.

The and XXX ITS $XX EBITDA flat total segment the PST company orders year. quarter. in increased For company from segment on FX came costs basis, revenue adjusted was QX Total margin both XX%. while million prior and the the margin year-over-year, corporate at increased the for points basis XX% an grew adjusted

was quarter and rate increased both above XX% up XX, full FX The from at year. basis. The for year growth continued for year Finally, adjusted basis well generation Total total increased share. to by XX.X%, PST full incentive finished $XXX support the the orders the areas rate Slide XX% ITS revenue costs in $X.XX adjusted while was as demand increased an finishing adjusted per with X% margin compensation and grew IoT adjusted driven on segment like adjustments. points. XXX basis XXX EPS tax company year adjusted the EBITDA XX%. On slightly company XX%, the quarter segment as points, margin prior the investments of the increased Corporate impact million, to

XX% the $X.XX to share. for up Lastly, adjusted EPS per year was

flow for Leverage totaled was was approximately million and Moving and improvement at the turn billion X.X billion in through on which slide. which revolving repurchases of for CapEx, returned on million. X.X a $X based to share availability we was shareholders credit our billion cash $XXX $X.X quarter liquidity $XX the Free including Total of year-over-year. now cash to facility. the stands next million, on dividends. turns, And quarter $XXX XXXX, $X.X

M&A the now use top deployed for to within outflows repurchases, and look our for expect be Vicente to primary and allocation, we our call M&A continue ahead. I included million share back capital our discuss million of to $XX will in Specifically $X cash dividend M&A to remains $XXX payment. our cash turn to quarter, million we segments. the as priority

Vicente Reynal

Technologies year-over-year year segment solid delivered margin growth On Slide XX, EBITDA an an Thanks, X%. with revenue of Adjusted EBITDA up margin adjusted of incremental Industrial from basis with increased Vik. organic our points XX% of XX%. prior XXX Services year-over-year XX%, and

note XXXX that full delivered expansion achieved , years also have to XXX of We which XXs of we ITS already important QX target X margin our schedule. for is to basis adjusted is high QX. margin ahead EBITDA from It points a sequential

for up our to demand continue organic solid orders also We products see with X%.

truck electric double orders Moving double-digit that order Industrial currently issues. were to digits in down orders, from revenue. decline blower vacuum up by in manufacturer digits and low and in The compressors highlights, line debooking low in mid-single double some were driven battery order was up but an the low an supply digits in Europe product had revenue. up mainly

However, of it the for starting strong to show FX and to core revenue recent mid-teens were also SPX double and XXXX. acquisition orders up compressor product X-year Also, was up in that and low excluding blower a industrial On Roots is stack, prospects important up continued momentum excluding revenue are stack, mid-XXs. up on highlight better vacuum Air look orders this blower. the manufacturer lines a was digits XXs, were Treatment and X-year to high

to regional reminder, in more a this on information appendix. the detailed was page on additional XX of previously product which the included splits, As chart, we and lines have for Slide

Ingersoll a with digitally great Innovation is competition. energy improvement our This sustainable new XX% with is a example highlighting providing Rand compressor technology. an we're in innovative solution enabled section, a efficiency advanced the versus For product how Action of X-stage

a the health which to EBITDA Science underlying flat Turning Slide margin of about growth approximately down adjusted of was year-over-year The segment the in Organic million, PST with Science of positive XX.X%. was and see Precision Organic year-over-year. XX. by X.X%, organic PST up revenue X% stabilizing we driven business. and approximately team the $XX orders delivered We businesses. remain were orders Life the Technology

out In quarters. orders revenue last XX businesses fact, and has XX PST, excluding the of Science seen growth organic the in positive Life

in segment Investor digits Day Overall, remains In QX. our industrial long-term addition, were growth on the in track meet orders the businesses mid-single commitments. short to cycle P&C up

both PST high-growth, end IXV ARO piston our in line highlighting This pivot demand into For pump is existing Action, a generation product system. a Innovation to perfect market. of leveraging sustainable we're and an our example

in a we past for panel with annualized orders the months, Over has million have taken already producer, the solar revenue. in which million $X potential leading OEM $X aftermarket XX

year. M&A be X% and to XXXX are Corporate As we X% the Page X% XX%, to half X/X the evenly be be the grow of year. up the in $XXX table, of are billion. second the to projected contribute CapEx our range expected to impact tailwind and incurred M&A introducing all growth as FX is X% X% around the X% planned fall the X/X. EBITDA and realized move to We interest at complete projected million with XXXX At of about half of adjusted at expenses year, quarter the as will growth rate approximately the relatively to of $X.XXX at X%. growth be revenue volume Total a company to and roughly for expected guidance. to X% approximately anticipate of to be acquisition X% is expected is $X.XX $X.XXX reflects Friulair. a be which million, to closed approximately XX, billion bottom evenly is EPS between is to throughout and X%, and in organic within of costs midpoint. adjusted is Total which first is for we're We of the price the company $X.XX, X% which the expected gross million of per to range and throughout anticipate of where to tax revenue. adjusted $XXX transactions $XXX well

adjusted tax on On the with page, and the count based is full the both the growth we right-hand X% guidance, year associated guidance And above have side corporate income growth in and impact FX, costs, be changes showing bridge expected X%. EPS to activity to with interest of associated expenses, the operational included share and adjusted the rate. XXXX

in some commentary sit would mid-February, we QX. on here to we As like provide

We will expect revenue of to our QX return from in be lowest revenue normal seasonality year. that a XXXX which quarter perspective, the the means

growth very In comp, revenue XXXX. addition, as QX organic of as QX we has a delivered reminder, XX% tough a in

anticipate flattish we organic up revenue slightly result, quarter, the to be with to year-over-year a expansion. As continued growth for margin

XX. Slide Turning to

want wrap Ingersoll position. to solid today's As in I Rand call, on up a we reiterate is that

and our continue have actions. to demonstrating We to your of our you our again engine our profile. to financial the and and our excellent economic is growth long-term financial for to employees, I date of of by to durable want you for the both another reflective strong record year. We deliver increasingly and results finish guidance 'XX and our To thank performance results the impact hard results owners These through Thank work, our meeting targets use executing resiliency commitment company. IRX. each as focused show the you delivered

comprehensive as resilient is and Q&A. the that, may continue remain the conditions with outperformance. We market prepared ever. our allocation as sheet deploy remain dynamic the balance as and strong the Our And with we for with we're our back come. And to return investments have market highest we of the disciplined nimble, to continue record track monitor capital it to challenges and that for and strategy, capital capacity I'll open the turn to call operator

Operator

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

Michael Halloran

piece. acceleration, see an and more with question. Ingersoll I the a are So you stability. Less can have help question, you an you the you're market sequential it drivers specific an context see to normal the on relatively I and environment, assumption of or specific know meaning, you relatively relative all use of ended whatever growth markets about of there guidance end to broader for where year maybe concerned to understand you embedding appreciate pockets specific just talk that a opportunities just you're end doing what start environment goose Any this a where comes seasonality. lot when underlying the Is Certainly, perspective you just But markets. where the end from broader could to and let's

Vicente Reynal

even organic. is on strong not also so half the that say of first also relatively America, revenue mean the mainly mean, growth in Americas, we're think that we a Europe has that I was Mike, a we market on outperform growth progress in I'll expect Mexico few market South where Middle say, even I'll too perhaps in I in could Asia tough the to say, we but we're by you lot the say point India, Pacific week I region momentum, in kind most I momentum. pockets would APAC, quite XXXX. half as -- we India. not I China very driven in I'll not Yes, first seen East is is by that I'll there. Mainland call perspective but by I would good first. from I but down a of is they I it and teams perspective, one China. But very this and the mainly momentum only that, give India time, in have And and too you've driven that done And in I'll particularly maybe say, have only good year the as Europe that the with from inorganic specifically, an that to just in here headwinds, want immune to mean well, of there investments how comps. remains of say the as at Pacific, good solid I that really XXXX much organic the proven better Mainland Europe do here well saw call of America, as we more it, Asia double-digit booming. We're not seeing about a broader would -- it U.S. there's expected, some stable. teams also going stable. last and seeing. mean, that say And

a pump. IXV good way nothing a say end sustainable product the pivot able use reinvigorated. us differentiated piston relaunch call ARO to in product good because utilize here I line end position that is perspective, would out to from a into sense line regional growth a that have to high-growth these that of gave from a as market This very markets. of photovoltaic kind of highly always we very We were an you on you X generation, We seen I we And to with example kind with demand perspective, that's legacy that be market So end product. cells.

continue as I and So be It's demand to same. Mike, very think way mean a I to the the I'd IRX leverage execute. playbook be agile, say, nimble, continues generation to

Michael Halloran

No, a of side. like area seeing PST that, the on sense. X follow-up then lot here. a that Life headwinds are the Science some The makes And of folks

You listen saying to modest. industry front under stability there's halfs Is half, that what point? at what at are from the a the bigger still players your expectations are in curve this least recovery improvement more back

Vicente Reynal

kind say as kind an the in But as should seeing the well, these improvement. to of mean, maybe here what as bottoming said, the I out think that come you -- growth That's logical into too I half over we of term. say that don't and not we way first I good Again, then end continue exponential Mike. markets long pent-up to I in way. not there's demand. get very to see mean back would sequential a

Operator

Mitchell comes Your Julian with next from question Barclays.

Julian Mitchell

perhaps Just sort to look just first of cadence first at wanted through the the off, year, off.

is that kind kind what you of high on across we looking the XXXX? at it XX% quarter based through year. both steady of assume segments first XXs sort said, of called earnings fairly of incremental figure for out that margins, fair when the move about we're And you year. Is as is to So for

Vikram Kini

I'll probably is first front. your part Julian, take I'll margin of Vicente talk Yes. the the on question, this let and Vik.

the revenue in of to XXXX. the then and with, started we delivery phasing think XXXX, in in manner I maybe other consistent phasing the or... the is saw think say, say at ballpark. if I margin terms a the that's piece, right in of earnings ballpark right in as terms for right look generally, you'd Maybe expectations the you're you it here in incremental I'd be here our And I think -- way you're --

Vicente Reynal

the about XX% And Yes. main when say, I I at that be that revenues. incremental to the margin, in XX% way I margin of that the margin. the think from bucket momentum I take IXV, mean, continued always think first that. about incremental or will you I we buckets, the that can -- think comes initiatives on growth price, recurring I'd mean aftermarket, particularly good improvement look very do the good incremental

improvement bucket be second the will around about. that M&A activities always spoken prior we The have

the appendix some The XXXX. of And be of probably always part continue third did saw to proactive improvement margin that would and in of last of is at say, This our bucket, restructuring of proactive bucket -- cost. you fourth this is is corporate on terms we the kind end the nimble. some I around

down You million saw going corporate so. costs roughly $XX or

Julian Mitchell

comps. tough we're just And orders, of in you sort of on starting reflecting of quarter what naturally, we get out down that as of think comps then half perhaps the the helpful. very the and environment orders you Asia the of volatile as year-on-year year, kind sort about quarter-to-quarter, orders sort after Do year the at That's Asia perhaps up in a and the pick looking a tough and said better? first being first

Vicente Reynal

longer-cycle we to we booked being half, is anticipate guide sequentially way definitely XXXX perspective. expect or on quarterly we for but be up year do So it absolute different larger be above we too on think projects that. to as well the typically below don't typically orders see, then book an the -- typically on from basis, you as X any due orders about X But second we in to first half. to And and in that the and QX the to a on don't the dollar a book-to-bill QX

Operator

from next Vertical with Sprague question Research. Your Jeff comes

Jeffrey Sprague

to that XXXX? expect of here to you kind to of now just us actually of Sciences is it in tough level do moment for we what back can a growth just years, couple come a after and PST Life return now? Vicente, business set percent And

Vicente Reynal

XX% roughly I expect about So And growth. PST we think half into the is think today. of when the as getting Science normal XX% that to segment be the to is second back to going we a Life business

Jeffrey Sprague

Can just price then price guidance particularly cost ITS. equation through kind just you in And bit what you're on on we and give move little volume. as just a Right. -- of versus of the thanks color maybe the the year for expecting

Vikram Kini

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

think I simply price be seen each stated both to basis. you're what here, generate X% XXXX. quarter you've different a expect year to think meaning would anything price don't I going dramatically positive a to see from perspective we on full of We expect historically, than approximately dollar and margin cost

So PST we equation again, to comment pertains different ITS nothing of the as year. well. clearly, to the in as that segment, that ITS terms as obviously, move bigger as being well And

Operator

Your next comes Melius with Wertheimer from Research. Rob question

Robert Wertheimer

Industrials, Actually, market there dynamic you anything use been kind in compare Life back? bounce seen long I in wonder in seen market I just -- there demand Is and a recovery of the more maybe could other life Is look we've factor to drag. Has the guys just for question to Europe like? just been some you outgrow And there if you that tough in a a on markets mean the What in different one in maybe year. there. Life I a China does constrains that companies sales and mean Sciences of explain we've dynamics generation science? Has IRX Science. that it. last

Vicente Reynal

businesses out X balance the China. on of by similar side to excited market. China. impacted balance would have item say different But of CPCS CPCS more I have said, seen ] we're pivoting is that were the call the that the seen X impact particularly that markets. they perhaps being [ and I mean, Life of again, much in for the example and prospect [ than like declines mean, that I referring biopharma-related Sciences, ] the our And think of markets. you the the exposure, with say, of better to, I And with China isn't note to end is ITS I'll it we Rob, Life business Yes, water that in Science

the the that [ battery too having water took to example, much. relaunched from same away into that lithium product move product the and for very move unique without and to more the So a ] CPCS reconfigure with proposition production market

air So I mean [ basically, to the continue we ] market do having just reconstruct think nimbly we and navigate from how other continue very lines. move without the to agile I to product that. to one

Robert Wertheimer

Yes.

a bit was little it too. So of

a it or kind pop in was you back stop demand as presume bounce destock So just just to Jeff other way, a does you growth. allowed does know normal customers demand I the up question normal this like you whether does it's generation will look of maybe Or other Sciences. has outgrow in generation growth? like to whether I -- back? of Life like it same just don't at or look the and then to 'XX whatever your -- return in maybe tools decline a And but sales or the had there. led below normal side asked

Vicente Reynal

we can efficiency, and digitalization, customers think then our a very fragmented underneath really efficiency, water important. all base very reach this pretty tremendously being about rapid thematics -- to great. products very we To very applicable highly I then market No, customer solution that our think the Sure. absolutely, And way, with it, helping demand any we're man call really a generation, to better and be are cost-effective these is mean, generation can much us first provide because the selective. question, energy end in quickly

of is way the massive to bounce we For If the we but second think normal. about the question, normal. like back. that don't kind more expect way happens, -- we clearly, this it We is more view upside, it

Operator

from with Citigroup. Kaplowitz next Andy comes Your question

Andrew Kaplowitz

over market your I M&A think X last deals? the think, Is this had get difficult Are up more over QX deal billion, seeing your it to I more? And in finish up? from of finding opening larger more see XX, $X an line? deals Or just you quarter. open those you the couple bit do that to team ones LOIs increase those a is the you in mentioned still larger you market that

Vicente Reynal

few say these that, the yes, that transactions it over the M&A, named relationships. perspective which I feel mean we with past done are on years. that the is we the some So and acquisition well, built XX open meaning And source, to to proactively have I bolt-on been This would XX up. been And what Luigi. nature in these size founder also in we incredible to with again, too the exactly are have I'll continues deals Friulair sole in talking have contact similar LOI put happened as the and LOIs that in family the I've

but so funnel a deals where of outside those still this again, eye, exceeds So billion. price -- purchase couple $X the we of have in

diligence, So not still those -- purchase price actually we our that you transactions. our difficult, funnel. case it the that to continued prudency the -- I also of even obviously still of billion a those decided of also yes, X continued X which I that to months of $X have proceed. we best again was we speaks us model we timing after there's that, of walked couple just the to but and discipline for from away mean, in X will tell

opportunities highly remain good in So just of are we environment, disciplined a see lot and there. this we

Andrew Kaplowitz

compressors? the that's supporting do the very durable it of end it growth. pretty you And cycle, EMEA, markets, your but give I your X that's growth? at if then helpful. stuff is. you what than look short-cycle larger business the color And Americas sustainability more question before, of terms Is more of answered think continued the Is markets more of the XX% us That's can and you in longer

Vicente Reynal

maybe that -- on see we think we'll shorter longer a years, couple cycle. continue continue We PMIs now over do you momentum. better perhaps cycle, I it of was the maybe of think lot the that medium past more to Yes, see better as a see to to is kind

even about that year-over-year also see up saw industrial then spoke digits mid-single on particularly, some even cycle So and say, already shorter of here. inflecting, sequentially. And said that, we the we you that PST we let's

around countries stay pretty out agile are save That South a to around say so be be case to the continues But -- I our past good the we the energy. that or in our to in America. efficiency about for mean, So thematic we've -- talking even reshoring, Mexico couple compressors in continue of in that these I very story Andy. even thematic with that of think -- strong, tremendous the continuing to I think been same I amount happening thematics pursue how yes, can very there, is energy would like years, continues still teams

Operator

from comes question next Coe Research. with Wolfe Your Nigel

Nigel Coe

think I but just us questions, China, asked, on seeing in big the been you're quarter. was maybe bit of the give in have all like color a what down So that looks

like easier the comps? quantify Is part and year. China Any the as year, base then don't acceleration, view half Life first that perhaps mid-single-digits half we China? in know, some simply sort growth, of there? half, seeing in what's back and like So color half of that of the lift maybe perhaps your kind Or versus I Sciences. of X% second in in case are the of just looks that first core to then And on maybe we're flat going the it to

Vicente Reynal

Yes. new Chinese the few China China happy I a was and January year. here of -- I the in -- in mean with we team, were weeks actually pre-celebration earlier ago so doing the

I addition business X been to to X to performing. the how that times. just reviewing in but past mean months, China I've to now And over is So I or think mind, I was X in the keep X --

close it's we to to can really that understand control. X control to So stay continue what continue teams I how our think just we

quarter low in that So mean, like fourth of top mid-single But mind saw the this down is XXXX. digits. orders yes, keep on in was I from a QX double-digit that perspective, in growth China an orders they

teams this X-year time single-digit I So is the our went momentum, that again, which pockets some XXXX. to in I good still China of what's about stimulus teams saw to continue categorize you high growth. other When is maybe China seems how to the the in stack, be that they will much pretty than consider markets environment everything on that order I on I the think in technology better they end going happening saw leverage what that are of in a into In impressive. today. sense see there terms and reenergized the

see of by I agile continues in to those how the encouraged and of team that very to navigate nimble pivoting areas market to being So was difficult very terms good growth.

Vikram Kini

Nigel, foremost, including healthy point Yes. growth being a would that's do Yes, one with to; of good nature. first part for that, into I question the the your longer cadence in first factors year percentage on second about still half. we a kind of and walk second the cycle probably the of backlog, of half

the a do year So that us a to the in back board. tend get China comps then naturally some But visibility across think year. obviously whether business. of side yes, good be half of into projects Life I lot little statement of the well more Sciences clearly, when kind moderate about, clearly, those ship. the on bit it there's truth made of the equation in of as the half of gives a back the lot And more you the PST the as

'XX it's I delivery and versus very couple the actually of of consistent think phasing we in factors. a again, seen different earnings we before, historically. said what is revenue But think So you've of like

Nigel Coe

strength the considering remarkable That's great color. compressor is in in the follow-up European My on going there. question what's is orders economy

prices. rank But COX to obviously, to that. would What most So important factor. X X those top say targets, and Scope you what of rank do X, high order energy you you the if on -- these is IRX if had pricing, had emission you

Vicente Reynal

energy prices terms high the the one kind COX. interrelated #X, targets in put would X out that companies prices, the yes, energy -- the of then of other X, I And say with of which I'd and high Scope have third around be are many say one. Scope but And would there.

Operator

from with Goldman next comes Your Joe Sachs. Ritchie question

Joseph Ritchie

were the nice obviously, margins to So end great. year, incremental

targets You time. X margin hit years ahead of your

think margin have IRX incremental know -- this of to you I but you just expected. XX% ultimately expansion this about weaker curious say that ITS I business and I improvement, how guess now, at just I'm if deliver volume this if dependent the would is So volumes turn XX%. much than you that of target for like year the just to margin ability about to point? is your be out continuous all continued know

Vicente Reynal

I'd a activities lower even we IXV that aftermarket. you I price even generating and call about it think by when good have say done, mean, shows that Joe, it very but the -- margin. driven growth, And our that also mean, guidance, that's just I still

the leader way to in of is we to us past, a to in that driving are PST the not initiatives Gardner have addition, And to -- those what ahead X restructuring very fourth is surgical ITS quarter of continue we they think the for said -- that I surgical on continued core think methodology that the end was again, you, there. how they but was event I always the that year. you was that the in in between had the that integration we well segment it a IR prioritize our ago, call proactive and even tell we just just new X we worldwide well I that's at be some part P&L. we saw And really So like like prudency to I do initiatives and encouraging it, the done. of a that mean, those here that Denver like because weeks protect What into what did X took how can IXV type highly, team, see highly did a

So can margin ensure I can what we and we controlling taking to control that that's the solid deliver improvement. that think actions

Joseph Ritchie

are just are like Vicente, kind look, your business of any I'm particular in seeing you XX sounds XX change and road forward [indiscernible] might business the could or weeks. last to be the it, standpoint, curious impacting from across you've that next, we'll call in the there your region guys helpful. on impact That's several that any been next it regulations in months? a going regulatory

Vicente Reynal

basically first driven and I that -- little we new. our that mean, change effect air business. for refrigeration drive the dramatic in the into treatment are positive that standards mean energy a kind by U.S. know efficiency about is above I but -- the coming known But a they're of Europe view nothing in significant clearly would too I well. way, new. that would those are known are U.S. then some as standards in have the in will while we and that I There's that of further say not it

Operator

Jefferies. Your next question comes Volkmann with from Steve

Stephen Volkmann

longer-term here. couple a just ones Maybe of

of some at kind expect going the and to again, it's be back Just that to of backlog sort we should the now world should Or of it going rate think over is decline? orders that period, forward? normalizing kind backlog you do

Vicente Reynal

a would that pretty we're so Yes. which is encouraging mean good I backlog is to clearly, high news that still see.

time, perhaps here this approximately to over think -- again, to in of think we continue if normalized. we X expect about to that see we -- get book-to-bill business I think But continue XXXX. it I X yes, will that get of the that when

I have think we backlogs seem what done level a to than historically. be continuing pretty higher at

Vikram Kini

of of our the just I is longer would to that of there clearly do compared higher the the something thing amount -- then a only amount cycle in longer fundamentally projects, some is years level past, have with said, leads we you of backlog cycle, -- there the The That's which with to say now. backlog. feel the

think backlog of I that of in you composition a bit little to So have structural change a times. seen the more compared historic as the

Stephen Volkmann

it. Got

little And isn't may of that some to be, you what Okay. of transom over have or flywheel pieces going the and comes you that some quite thought companies was switching gears a sort and occasionally, bit. that then something. have in something have acquisitive business little disappointment a this it you guys are

kind we So importantly, some level that I'm just as part And forward? be happening? learned, we machine of this expect more should of curious, lessons anything any divestitures to go of like

Vikram Kini

that. start on I'll Steve,

didn't XXX% XX the them now over process expectations, this acknowledged and obviously, done, But get the the we've So have of say since not all day maybe before, integration before. done us probably seen slightly we've you've comparatively speaking, ones here X, transactions. probably not same. embedded where the that merger IRX from is, were below would ones are if that been what probably and we maybe And

to So on that playbook, the as got for acquisition terms continue and or to we've because a catalyst PST of an view those side playbook the deploy we're lesson really the within here the integration businesses the core. it's is that acquisition, learned ITS in fundamentally success if we going whether IRX embedding

Vicente Reynal

as the which IDM only that Yes. is the a dashboard part before, there's and is think getting And the integrated, all issues few M&As properly months any are staff or that this I'm implementation typically some quite IRX gonna basically we have but run say clearly would happens meeting, I few a if -- was see where ago a XX well my of focus of that of the saw And to add integrated. maybe we can we X areas it's months as not we on to of businesses did we add gaps. an thing an that that said I as that were Fridays, ago,

can So react and something correct as I that and it's having the if way. good not so Vik fast said, travel is news the right of course think continuos improvement, evolution that, going just part we

Operator

next comes with Snyder from Chris question UBS. Your

Christopher Snyder

I to on one. M&A and a maybe engine also more the wanted ask high-level

make the does that XXX of same So versus around Does the XX% basis as to this company X it contribution XXXX. to that so gotten be doing guess, to points years revenue in have, And above anything rate. change it to process just XXXX the is add XXX M&A difficult going for every numbers year? about ago I more keep run bigger XX%

Vicente Reynal

Day, Day, addressable Investors our think become market it that most XXXX, $XX recent think back addressable you will Yes, it what, I market saw being would said that it difficult. $XX our and Chris, more say maybe, our in about Investor say that in $XX billion, I was I mean, back when we billion would you I billion. --

on very So make we we it us market, -- in of market to a I and number how in ] increasing just M&A it's the on of the X addressable to this We're transactions able market that increase the be that's track when highly and statistics engine that always kind is think acquired. it we a gives able of by perspective probability. we're doing an by acquisition, the clearly, to that an as at a ongoing so from to grow. And data look terms flywheel that's a -- can we greater also not we with being on transactions thoughtful Tollgate be of and points, just addressable of fragmented continue are pool engine why [

of I process, that I mean And has change. So of M&A, in think the nothing terms in cadence changing the dramatic solid. pretty say been that it's I will

make always we transactions new possibly continue some a do. We leads think and improvements into spoke about can M&A about that and to look year how I actually ago, tweaks trends, we about that like micro we at XXX

on it trying So continue ongoing to evolve to better to make process our always basis. an we're

way So changing yes, the we do continually the always process, improving things. are we because

Christopher Snyder

at disruption to Do that. maybe strong on have manufacturing headwind follow years. productivity lot a margins the sure has pandemic, efficiency of of a returned was really up been of efficiency feel the the just like Do you is there's of back to capacity. coming fully this Obviously, last I then here in point? which out levels. pre-COVID I'm to margins some business. like X that in appreciate and X you Obviously, feel the And

Vicente Reynal

of Canal, mean chain creates change we're I so we're we, think -- bit with supply the company a Only assembly. mean, a to factory. here chain and mean, supply there -- little the of in Any the right? being happens, supply situation inefficiencies creates don't disruption it the for so and on Red that so time still the I giving situation I think And And Sea, example, disruption. global Panama that good there's a as you, lot of that because terms in a I I so. disruption,

pretty of want that, lean have a we we seen back to what we my improve pre-COVID. have say we is think also our view. not than operations. Chris, critical, And it better I'd maybe how that to So to the we're stability past. that That's to mindset that always factories improvement I normal continuous that did in and the continue Is in always view our of hey, that do terms

Operator

from comes with question Fargo. Wells next Your Joe O'Dea

Joseph O'Dea

in you just type on of potential And of much overall trying on generation that about of the to of to of embedded understand just of the if how macro volume of points couple the Is guide? algorithm. volume -- upside Really, growth of outgrowth? point you're we is and on about reflective initial or I is side. generation this how a and that underlying price growth Or sort think volume the have start wanted the things? kind side X of and there a just demand point thinking demand

Vikram Kini

start Joe, that with I'll Yes, one.

of always even a I there's we and on upside the volume side little demand view kind think side, on me frankly, unpack that the gen that let bit.

trends EMEA at I stack, relatively the more [ with the that top of largely think, you kind when as ] here, Vicente, facing at mentioned the stable earlier, you is look China thought and looked kind we growth is Primerica probably the at year, of said. we at algorithm, as that's the APAC, of regional about balanced most the for us, the equation least as enter we which headwind,

context equation say without the entered too more upside And solid the becomes here. or year the part progresses. of piece, probably of that of backlog, being years with year is more frankly, so backlog it volume even that Now if the the would in the we organic really past, year, there's opportunity so generation dissimilar healthy guide probably from, not in the demand we said, context question clearly, as

think the us as pulse we don't conscious particularly we're equation back into going enter are again, But the to some get taking and dramatically consideration regional historically. quarter to the we different and seen that those and second the and as through trends quarter for of we year. than the seeing, So year, I monitor the and those continue we're half is you've into of

Joseph O'Dea

quarter, XX% that XQ. to unpack if XQ you margins the to that the improvement XX% sequential the also to Understood. both could segments. bridging kind incremental of a then fourth just bit And ITS from little XX% then clarify, on to sounds And and in it supplies in like

I'm tough sure incremental And the was side not that or PST sets if details exit some there like there would side, comp. so of be any a it's but more was that the hit just on sort up ITS restructuring not that rate helpful. if

Vikram Kini

pieces Yes. in Sure. Maybe I'll here. those take

point went memory over my to from a tied QX productivity the from it tend our XX.X% and through volume margin a volume. year, about If of here. to a So pace correctly, to serves a QX. to to basis the EBITDA levels One, margin revenue I'd XX%, couple XXX frankly, measures things points of lot expansion little sequential are

drivers, to I think the see that's QX biggest quarter compared cost overall, you of year. shipment to I'd probably say like solid we continue when productivity some should exited the price like as in So a QX, and to the of positive saw as execution things strong you expect single heavier you the measures X the remain IXV follow. quite

And we The to in I'd as that equation. side accretive Investor good, the us, equation other Day, think the that see point revenue only we think ramp few during side. margin years, a nicely sets continue really that the also not see up for to on even whole we is say, that I aftermarket aftermarket momentum being as we is overall what that recurring expect as the about next focal thing continue well the to of would the big and but indicated

about I specifically. that's of we drove think again, think way in So the probably equation that QX of the what kind terms

that way is ITS of as more I EBITDA while the business kind mid-XXs whole we we full about Now overall around also it an said, has the of probably with such, in with of that, average. is bit here little to know opportunity. the into XX% the XXs the a towards playing and and but that think year delivering goes we in margins, XXXX. XX% the XXXX, that that like PST of be in get is realm We PST said terms obviously we're the probably there incrementals The that, pleased lower bit end a up opportunity, little can probably probably think about that should of outpaced how outsized I'd fact XX% more maybe think

well on cost of earlier, bit as puts a as think there's little upside year-over-year. of corporate and takes Vicente as, as So bit mentioned the there little a we

sense planning that kind itself little the thinking you bit gives about how a hopefully, a out. year of of So we're of

Operator

question from Next from comes Jones Nathan Stifel.

Nathan Jones

narrow I questions. made in drawing of fairly A you've add of know additions the one M&A portfolio. strategic to has to couple been the

So on there, more update add I still out just the that portfolio it's hoping get is benefits that you're that think capability? was an or of synergies seeing an there, built to you're not whether generating revenue to opportunity that or you

Vicente Reynal

good Flow to acquired Nathan, to and a quite the very acquisitions very Teatment well. from a the Oxywise, the for SPX also Friulair Yes, years that perspective I of acquired and being a of seen this that on then few Holtec, China, And couple now Air and we exciting it's not you ago we X is we is only because a even compressor. attached that. reason side, have made Air in -- definitely addition Hanye Teatment a mean

rate, attached think attachment the XX% it like compressor. If you to should a about be

of XX% aftermarket. drives are too how compressor, use then the say of to when roughly we as attaching One in KPI terms good it air growth teams think momentum. metric well, that. often you you of that a And about to our that's rate is some a clearly, And air treatment that that is exactly attachment -- with definitely So treatment is a that.

So generates good a very solid aftermarket. it

And connected factors, of the much way then and talking So is why common each you to fine-tuning it can actually other the then combination a those compressor energy that the in it lot. third treatment, being when X of like better a because we optimize and like you remotely the and have a item combination efficiencies air of connectivity. we

of So there's on strategic multiple driver see portfolio. we think that growth I levers this

Operator

ISI. question comes David Evercore next Your with from Raso

David Raso

that revenues questions. M&A couple heard thought Just to already quick basis clarification have I to A framework of already comment. up the acquired of X% or that this booked above word I will a XXX but XXX to on XXX, the incremental getting to what you XXX X.X% booked to of year. just truly flow of XXX through the acquired Was revenues. you XXX points

clarify that? just If you can

Vikram Kini

let take that. Yes, me David,

here. pieces in them take think I So

Friulair have the So carryover well Acquisition. you the obviously as as

comment the you our by. So annualized book the That's expect more to the we'd XXX see of the the to carryover close completed in revenue million. But is $XXX guidance that year XXX embedded about to goes we acquisitions as contribution. approximately be in that million guidance the contribution. the expect acquisitions The make obviously, the to $XXX and in to would year revenue date and

basis an on annualized would So that the here to for that expect on based and basis. the all points to Vicente be all expect XXX deals we funnel we make XXX to the comments Made, that

again, to and past. from is I stated each we think kind line X well short us in answer of But to in take here growth years how So those statements you've you operate seen other. separate economic should with expect engine continue our operate the

David Raso

clarification that. on the just the truck weakness, a like made on potentially you that I on call wanted in that Europe for order again. vacuum improving And to are out EV and manufacturer blower comment prospects

come not that on you to back be books? so, back because that million seems something so $XX be must on million, can that it of think or some I'm order come size small. books $XX the clear, Just could do the Is

Vikram Kini

debooked The to 'XX. enough, of in describe me QX QX happened it interestingly the it. would answer I'll and it let original we order and is, first way come the have in that 'XX part Yes, of I Vicente take

to enough of ends, hit both it us well in interesting So both quarter comp. as as kind the the

want to Vicente, prospects I So going forward. you the speak

Vicente Reynal

led highly went prospect the to now that is seeing needed. able bankrupt been it's manufacturing in where basically, battery And mean produce is touch and going the had a in mean, still forward situation Yes. these to we're to not that truck I them. is mean, being supplier with I that, great what trucks acquired, been I acquired assets mile Needless -- have for Europe, say, which last we're the this they trucks. very the the have technology. delivery they is

happen, conversations good be here prospects the could there we some XXXX. as And which go so continue to means that obviously into

Operator

question Bank. Your from comes Deutsche last Nicole DeBlase from

Nicole DeBlase

starting Maybe just with the free cash question.

So the XXX% about plans. are for thinking XXXX? working How guys capital all of CapEx conversion you

Vikram Kini

Sure.

we opportunity broad see in think I still think I strokes here, an call, the here.

is think of the I and long it. short

We the frankly were and elevated at things still momentum say, out sit pleased chain a we with of particularly of nature. cash I'd quarter. speaking inventory exit comparatively that While side, the in levels, much of dynamics kind ending on was our source very to, pre-supply the 'XX,

which still component the catalyst a in as is some portfolio bolt-on us, working say an that's nature, just not lot well just of be obviously, that well I'll M&A, the opportunity service of So we kind PST it to core as have I the for some that things whether Fair as environment, big part think organization -- of of shared of of call and just that blocking that's say the the as I'd of of a a tackling, definitely improvement. capital collections our and

So lends good source you and beyond. for a still that as think itself put 'XX of all I together, that opportunity

Nicole DeBlase

buybacks like -- count guys the based have on then it in outlook. and just share the look doesn't And guidance you -- any

buyback XXXX? how activity is in potential So on your view

Vikram Kini

that's any, incremental We not would correct. Yes, I say, buybacks do the have of guidance. as part

approximately But of for I to prior a a is think year. Now that that formally operate requisite the in the correct in always being is similar probably us XXXX and good approximately. way to expectations a million the the are you $XXX should it's meaning We've terms said said, in placeholder proxy here amount expect you guidance. years, not

Operator

Rand's closing will remarks. further turn at Reynal no back are Vicente call questions There to Ingersoll this time. any I now CEO, the for

Vicente Reynal

to that want And and ]. I our to like thank here, just And our have company. exciting Briana around because I and owners across [ of you, act who world, more of Thank high pass as see the engagement you will to to travel the level owners think wrap we the X as up we Yes. they continue energy employees it's are organization. very

our our powered by IR. on engine growth the economic think ownership momentum mindset leveraging and I that is

see So XXXX. the Again, in here very and to Thank forward to you. great another and happy year look encouraged, performance very

Operator

concludes This today's call. conference

disconnect. now may You

Ingersoll Rand (IR) 16 Feb 242023 Q4 Earnings call transcript