Ingersoll Rand Charting the Course for Continued Stakeholder Value Creation - April 15, 2020
←
→
Page content transcription
If your browser does not render page correctly, please read the page content below
Ingersoll Rand Charting the Course for Continued Stakeholder Value Creation April 15, 2020
Forward-Looking Statements This presentation contains “forward-looking statements” as that term is defined in Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended by the Private Securities Litigation Reform Act of 1995, including statements regarding the completed transaction (the “transaction”) between Ingersoll Rand plc’s Industrial segment (the “Ingersoll Rand Industrial segment”) and Gardner Denver. These forward-looking statements generally are identified by the words “believe,” “project,” “expect,” “anticipate,” “estimate,” “forecast,” “outlook,” “target,” “endeavor,” “seek,” “predict,” “intend,” “strategy,” “plan,” “may,” “could,” “should,” “will,” “would,” “will be,” “on track to” “will continue,” “will likely result,” or the negative thereof or variations thereon or similar terminology generally intended to identify forward-looking statements. All statements, other than historical facts, including, but not limited to, statements regarding the expected benefits of the transaction, including future financial and operating results and strategic benefits, the tax consequences of the transaction, and the combined company’s plans, objectives, expectations and intentions, legal, economic and regulatory conditions, and any assumptions underlying any of the foregoing, are forward-looking statements. These forward-looking statements are based on Ingersoll Rand’s current expectations and are subject to risks and uncertainties, which may cause actual results to differ materially from these current expectations. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those indicated or anticipated by such forward-looking statements. The inclusion of such statements should not be regarded as a representation that such plans, estimates or expectations will be achieved. Important factors that could cause actual results to differ materially from such plans, estimates or expectations include, among others, (1) the duration and severity of and governmental, market and individual responses to the coronavirus (COVID-19) pandemic (2) unexpected costs, charges or expenses resulting from the transaction; (3) uncertainty of the expected financial performance of the combined company following completion of the transaction; (4) failure to realize the anticipated benefits of the proposed transaction, including as a result of delay in integrating the businesses of Gardner Denver and Ingersoll Rand Industrial; (5) the ability of the combined company to implement its business strategy; (6) difficulties and delays in the combined company achieving revenue and cost synergies; (7) inability of the combined company to retain and hire key personnel; (8) evolving legal, regulatory and tax regimes; (9) changes in general economic and/or industry specific conditions; (10) actions by third parties, including government agencies; (11) adverse impact on our operations and financial performance due to natural disaster, catastrophe, pandemic or other event events outside of our control; and (12) other risk factors detailed from time to time in Ingersoll Rand’s reports filed with the Securities and Exchange Commission (the “SEC”), including Ingersoll Rand’s annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and other documents filed with the SEC, which are available on the SEC’s website at http://www.sec.gov. The foregoing list of important factors is not exclusive. Any forward-looking statements speak only as of the date of this presentation. Ingersoll Rand undertakes no obligation to update any forward-looking statements, whether as a result of new information or development, future events or otherwise, except as required by law. Readers are cautioned not to place undue reliance on any of these forward-looking statements. Non-GAAP Financial Measures Included in this presentation are certain non-GAAP financial measures designed to supplement, and not substitute, the financial information provided in accordance with generally accepted accounting principles in the United States of America because management believes such measures are useful to investors. The reconciliation of those measures to the most comparable GAAP measures is set forth in the appendix to this presentation. 2
Health and Safety:
Activated COVID-19 Task Force Early; Applied Early Learnings from Asia-Pacific
Formed COVID-19 Response Teams early. We continue to add enhanced protocols in response to COVID-19, including recommendations and
requirements issued by the Centers for Disease Control and Prevention (“CDC”), World Health Organization (“WHO”) and local, state and national
health authorities to protect our employees, customers, suppliers and communities.
Launched Organization-wide Empowering Leadership to Ensure
Quickly Implemented Actions
Communication Approach to Consistent Adherence to and Effective
to Protect Employees
Engage Employees Execution of Best Practices
Reinforced hand washing and infection control Cascading critical information from CDC and Designed local and regional task forces
training WHO to global employees; embraced early comprising business, HR and Environmental,
Health & Safety (EHS) leaders to share best
Enhanced site cleaning and sanitizing measures Conducting daily calls with sites globally practices and learnings; facilitates quick
assessment and decision making for global
Prohibited non-essential travel Broadcasting weekly CEO communication to all operations
employees on status of employees, clear
Implemented on-site social distancing processes, guidelines and actions Proactively implemented best practices
including mandatory work from home policy for organization-wide; for example, early on
those who can work remotely and limited on-site implemented best practices in Europe that were
visits to essential personnel only proven to work in China
Introduced health screening processes for on-site, Adhering to state and country mandates and
essential employees and visitors, including self- guidelines where we operate
declaration forms and temperature screenings
3
Protecting Our Employees, Our Business and Our Future
Employee Health, Safety & Support / Executing Downturn Playbook;
Business Continuity Implementing Prudent Actions to Preserve Cash
Modified production work flows in plants to allow for 6 feet of employee Reduced senior executive salaries and Board of Director fees by 15% for
separation, where possible remainder of 2020
All locations have an assigned EHS associate trained in contact tracing and Deferred discretionary merit increases for all employees worldwide until at
quarantine procedures least middle of the year
Daily tracking of status of all employees by global EHS team Implemented a hiring freeze
Providing at least a month of paid health benefits for employees who are on Limited all discretionary spend across organization
furlough All business indirect spend requires approval from VP/GMs and all
corporate spend from CEO/CFO
In the US, established unemployment compensation COEs by state to
All capital expenditures require approval from CEO and expect
assist employees in applying for benefits
meaningful reduction from typical historical levels of ~2% of revenue
Protecting employees and staying operational – 98% of company sites
Deploying furloughs, job sharing and reduced hours in locations where
operational or transitioned to remote work model as of 4/13
warranted by demand environment
All major manufacturing locations in US, UK, Germany, Brazil and
China operational; most Italian sites currently operational with balance
expected to return to work by end of April
Following all local governmental recommendations and applying for
exemption status where applicable due to mission-critical nature of
products and industries served
4
Exciting Runway Ahead with a Track Record for Capturing Opportunity
Merging two strong cultures to form a talented global workforce powered by an entrepreneurial spirit, ownership
1.
mindset and sustainability focus
Enhancing scale and reach of innovative and leading brands centered around mission-critical flow creation and
2.
industrial solutions creating greater end market balance and diversity
Leveraging world-class demand generation expertise and operating platform to capture profitable growth, including
3. ongoing aftermarket growth as a percentage of total revenue, and margin expansion opportunities; IRX is our
accelerator for execution
Fortifying our financial position supported by a strong balance sheet and ample liquidity; committed to achieving
4.
top-quartile industrial performance
Re-energizing our focus around environmental, social and governance (“ESG”) initiatives with highly
5.
aspirational goals
5
Ingersoll Rand at a Glance (NYSE: IR)
Portfolio of Mission-critical Flow Creation and Industrial Technologies with Leading Brands Powered
by Employee Ownership, Execution Rigor and ESG Mindset
2019 KEY STATS & FINANCIAL METRICS1
Davidson, NC $10.9B ~18,000 ~$6.2B ~$1.2B 19.4% $2.3B ~2%
Headquarters Market-Cap2 Total Employees Adjusted Revenue Adj. EBITDA Adj. EBITDA Margin Aftermarket Parts Capex as a %
& Service of Revenue
TIMELINE OF EVENTS REVENUE BY SEGMENT REVENUE BY GEOGRAPHY
• MAY 2017: Gardner Denver IPO
• APRIL 30, 2019: Gardner Denver entered agreement to combine 7%
19%
with Ingersoll Rand’s Industrial segment; highly complementary 13% Industrial Technologies & Services
companies with combined history of 300+ years and shared Americas
Precision & Science Technologies
commitment to operational excellence, innovation and quality EMEIA
14%
Specialty Vehicle Technologies 54%
• MARCH 1, 2020: Began operating as the new Ingersoll Rand, 66% 27% AP
High Pressure Solutions
including four-segment reporting structure and new Board of
Directors
1Combined financial metrics based on supplemental financial information furnished on the Company’s Current Report on Form 8-K filed with the SEC on April 15, 2020 (the “Form 8-K”) and included in appendix of this
6 presentation. 2 As of 4/13/2020.
Industrial Technologies and Services Snapshot
Description Key Brands & Select Product Examples
• Global business executing under five main P&Ls:
• Ingersoll Rand Industrial CTS business and Gardner Denver Industrials business (including Emco
Wheaton fuel systems); run as three regional business units
• New Global Pressure and Vacuum Solutions business unit with a significant engineered-to-order
focus, including Nash/Garo, Ingersoll Rand MSG centrifugal compressors, and Emco Wheaton
loading systems
• Additionally includes the Power Tools and Lifting business unit
• Broad portfolio of air compression, blower, vacuum and fluid transfer technology as well as tools,
Rotary Screw Centrifugal Side Channel
hoists and winches Compressor Compressor Blower
2019 Financials & Revenue Mix1
$4.1B $0.8B 20.1%
Adjusted Revenue Adj. EBITDA Adj. EBITDA Margin Vacuum Pump Couplers Power Tools
Geography Composition
23%
Americas
44% 40% Aftermarket Reciprocating Air Liquid Ring Engineered-to-Order
EMEIA Compressor Vacuum Pump Systems
60% OEM
33%
AP Expecting Majority of ~$250M of Forecasted Synergies from
the Transformative Merger in this Segment
7 1 Financials based on supplemental financial information furnished on the Form 8-K and included in appendix of this presentation.
Precision and Science Technologies Snapshot
Description Key Brands & Select Product Examples
• Consists of Ingersoll Rand’s Industrial Fluid Management (PFS/ARO) business unit as well as
Gardner Denver’s Medical business unit and Gardner Denver’s Specialty Pumps
• Broad portfolio of positive displacement technologies, including metering and dosing
pumps for multi-industry use and specialized gas and liquid pumps for medical, lab and life-
science applications
• Serving mission-critical applications with attractive aftermarket and like-for-like
replacement pump opportunities
Metering Pump Diaphragm Pump Wob-L Pump
2019 Financials & Revenue Mix1
$0.9B $0.2B 27.7%
Adjusted Revenue Adj. EBITDA Adj. EBITDA Margin
Dosing Pump Syringe Pump Peristaltic Pump
Geography Composition
21% 15%
Americas
Aftermarket
48% EMEIA
OEM
31% AP Rotary Air-Driven Liquid Condensate
85%
Vane Pump Pump Pump
8 1 Financials based on supplemental financial information furnished on the Form 8-K and included in appendix of this presentation.
Specialty Vehicle Technologies Snapshot
Description Key Brand & Select Product Examples
• Consists of Ingersoll Rand’s Industrial Club Car business
• Global provider of utility, consumer, and golf vehicles and aftermarket services
• Utility: Fit to task, 4 x 2, AWD and multi-passenger transport vehicles in commercial applications
across many vertical markets GOLF CONSUMER UTILITY SOFTWARE
• Consumer: Personal Transportation Vehicles and accessories used in neighborhoods, communities
and vacation locations
• Golf: market-leader in fleet golf cars and light-duty turf utility vehicles for private, daily-fee and
municipal golf courses worldwide
Onward 2 Car Tracking &
Tempo Caryall 1500
Passenger Power
2019 Financials & Revenue Mix1
$0.8B $0.1B 14.2%
Adjusted Revenue Adj. EBITDA Adj. EBITDA Margin
Onward 6
Tempo 4Fun XRT 1550 SE Car Control
Geography Composition Passenger
7%5%
Americas 26%
Aftermarket
EMEIA
OEM
AP 74% Mobile Precedent XRT 1550
88% Add-ons
Merchandising Stretch PTV Intellitach
9 1 Financials based on supplemental financial information furnished on the Form 8-K and included in appendix of this presentation.
High Pressure Solutions Snapshot
Description Key Brand & Select Product Examples
• Consists of Gardner Denver’s Upstream Energy business
• Highly engineered frac and drilling pumps and associated aftermarket parts, consumables and
services for oil and gas development operations
PUMPS FLUID ENDS CONSUMABLES
• Global network of 10+ repair facilities located in shale basins to provide real-time service to
customer base
• Strong customer relationships and large installed base coupled with leading aftermarket
service/repair capabilities and consumables technology allow for business continuity in cyclical
markets; leveraging existing technology to enter adjacent industrial applications
Frac Pump Stainless Steel Valves and Seats
2019 Financials & Revenue Mix1
$0.4B $0.1B 27.0%
Adjusted Revenue Adj. EBITDA Adj. EBITDA Margin
Drilling Pump GDNX Packing
Geography Composition
5% 16%
Americas Aftermarket
RoW OEM
NEW: Industrial
95% 84% Applications for “Will-Fit” Plungers
Frac/Drill Pumps
10 1 Financials based on supplemental financial information furnished on the Form 8-K and included in appendix of this presentation.We Have Significantly Transformed Our Company
Legacy Legacy
Ingersoll Rand
Gardner Denver Gardner Denver
Today2
(TY 2015) (TY 2019)1
Revenue $2.1B $2.5B $6.2B
% Aftermarket
Revenue
36% 38% 38%
% Upstream Energy
of Total Revenue
18% 19%Continuing to Execute Our Simple Strategy and Adding Sustainability as a New Pillar
• Ownership culture
Deploy Talent
• Highly engaged employees
• Speed of innovation in selected niche markets
Accelerate Growth
• Execution of Demand Generation
• Grow aftermarket revenue stream (40%+)
Expand Margins
• Innovate to Value (i2V)
• Unlocking cash (NWC as % of sales)
Allocate Capital Effectively
• Converting supply chain to pull system
• Embedding Environmental, Social, Governance (“ESG”)
Operate Sustainably mindset into our way of life
• Aspiring to be in ESG top quartile in industry
12We Are Building a High-Performance Culture; IRX Is a Competitive Differentiator
IRX IS OUR ACCELERATOR TO DRIVE THE BUSINESS
• IRX is our execution engine, providing employees with a simple
process to drive high performance
• With IRX, we instill our values and execute our strategic areas of
focus in self-directed work teams
• Through this focused, simple execution process we strive to deliver
our purpose and live our values every day
• Policy Deployment (focus on employee engagement, inventory
reduction, i2V and synergy execution) has been launched in all
segments globally – 14 locations are making progress weekly in
execution and countermeasure implementation sessions
• IMPACT Daily Management (self-directed work teams effectively
planning, implementing, measuring and countermeasuring to achieve
100-day objectives) has been launched in all segments globally
• ~75 IDM sessions are executed weekly – including most
Corporate functions
• ~15 are new since integration – installs work virtually!
13Expanded Total Addressable Market: ~65% Larger
Our Combined
$41B Competitive Advantages
Mission-critical technologies with low
cost relative to overall system
Broad spectrum of technologies
MARKET DRIVERS centered on flow ‘creation’
INDUSTRIAL
TECHNOLOGIES & SERVICES Energy Efficiency & Total Cost of Ownership; Significant and growing aftermarket
$25B Real Time Monitoring platform
Strong engineering capabilities and
significant investment in innovation
Resilient financial profile that
positions us well to capture growth
opportunities
PRECISION & SCIENCE TECH. Advances in Scientific Research,
Medicine and Urbanization Leading brands
SPECIALTY VEHICLE TECH. Electrification of Passenger and Utility In region for the region presence with
Mobility
HIGH PRESSURE SOLUTIONS 40+ manufacturing sites
Unconventional O&G exploration and
advances in Industrial Processing
TAM 201 9 TAM Today
Expanding presence in new adjacent
Legacy Gardner Denver Today market around Precision & Science
2019 Investor Day (April 2020)1 Technologies
14 1 Sources: Frost & Sullivan, Oxford Economics, Ducker Worldwide, Freedonia, National Golf Foundation, Small Vehicle Resource, Power Products Marketing, Management Estimates.Enhanced End Market Balance and Diversity
Industrial Specialty Upstream Chemical Food &
Manufacturing Vehicles Energy (Process & Dosing) Beverage
28% 13% 9% 7% 5%
Medical & Transportation Downstream Midstream Automotive
Laboratory (Land & Marine) Energy Energy Services
4% 4% 3% 3% 3%
Environmental Mining & Paper Printing Other
3% Construction 2% 1% (Small Niche Markets)
3% 12%
Strong End Market Diversity with Upstream Energy ExposureLeading Product Portfolio Covers Broad Range of Technologies and Applications
HIGH
Reciprocating
Vane / Oil
Less Recip
Bottle Blowing - Reciprocating Centrifugal – Engineered Air
PRESSURE
Compressors
1-Stage 2-Stage
Centrifugal – Plant Air
Small Recip Small Recip
1-Stage Rotary Screw 2-Stage Rotary Screw
Scroll / Oil 1-Stage Screw 2-Stage Dry Screw
Less Recip Liquid Ring Side Channel
Fluid Helical & Variable Helix Screw Turbo Blowers and
Multi-stage Centrifugal
LOW Pumps Radial Bi-Lobe & Tri-Lobe Specialty Pumps
LOW FLOW HIGH
Peristaltic Radial
Side Channel Lobe
Helical
VACUUM
WOB-L
Screw
Claw Vacuums
Diaphragm Turbo
Vane
Liquid Ring
Legacy Gardner Denver Legacy Ingersoll Rand Complementary
Complementary Legacy Businesses Cover the Spectrum of Air Compression and Specialty Pump Technology
16Complementary Product Portfolios Create Full Suite of Technologies and Solutions
OIL-FREE TECHNOLOGY COVERAGE
Legacy Gardner Denver
Legacy Ingersoll Rand
Complementary
NOW BETTER POSITIONED TO CAPTURE
OIL-FREE MARKET OPPORTUNITY
A leading player in the fast growing $3B+ oil free market with breadth of Expansive installed base with opportunity to
Compelling Market
technology solutions; market growing at ~2x above traditional market level1 capture greater value
High-quality compressed air, free of oil contaminants to power air driven
Differentiated Solution
instruments and equipment Expanded aftermarket opportunity
Ingersoll Rand: 185-355 kW (E-Series)
• Lower total cost of ownership
• Increased uptime; reduced maintenance and improved life Building a complete line of air compression
• Reduced operating expense technology from small to large compressors
Strong Customer Traction
• Efficient production and delivery of clean, dry air
• Access to capable and responsive service Enhanced solution and cross-selling
• Ability to configure and option up opportunities
Gardner Denver: 75-160 kW (Ultima)
Enhanced Solutions Are Expanding Our Ability to Compete and Win in the $3B+ Oil-Free Market
17 1 Sources: CAGI, Frost & Sullivan, Oxford Economics, Management Estimates.Focus on Demand Generation is Creating Significant Pull-Through Opportunity
Optimizing Opportunity Capture through Global, Seamless “Real-Time” Case Study
Contact and Lead Collection Across All Channels and Real-Time
Ventilator Demand Generation
Lead Distribution
• Proprietary engine to digitally connect all marketing/sales outreach efforts Background
• Gardner Denver launched in 2016 in Industrials and expanded in late 2018 to
Demand for ventilators is at the heart of the fight against COVID-19. Worldwide ventilator
Energy/Medical; launching consistent process in legacy IR compressor business stocks are insufficient for predicted demand.
in 2020
• Channel-agnostic and scalable across regions, products and brands We have deployed an innovative combined sales and marketing approach to engage
ventilator manufacturers and overcome travel restrictions with digital marketing, telesales
• Global team of 50+ marketing professionals with COEs in US, Poland and China and social selling techniques. Due to these efforts we are now working with leading
manufacturers to supply vital ventilator components.
AREAS OF DEMAND GENERATION
Our Mission-Critical Solutions
Targeted Emails and Integrated Campaigns • Webinars • Telemarketing • Inbound
Calls • Social Media • Tradeshows • Website SEO • Search Engine Ads • • Elmo Rietschle side channel blowers for mobile ventilators and hyperbaric chambers
Account Based Marketing
• Thomas pumps for ventilators/respirators (non-invasive ventilation technology)
GOALS
Develop a Increase Customer Retention Translating to Quantifiable Results
Growth Engine and Lifecycle Revenue Stream
44 Accounts /
Target attractive verticals Leverage automation and
5,000+ Contacts 2,000+ $12M+
analytics to optimize customer
Accelerate new product adoption experience Top ventilator manufacturers Unique visitors on dedicated Funnel value created in
Capture and reinvigorate targeted with known key ventilator page within last 2 weeks
Develop talent force – deep bench supply chain contacts across 2 weeks
aftermarket growth for global sales and marketing 28 countries
18Integrating Two Great Organizations: Key Observations as CEO
Strong complementary cultures that are excited to come together and achieve
01 greater heights as one company
COVID-19 crisis accelerating integration and bringing teams together quicker
02 with notable collaboration
Strength and depth of talent around technology, products, talent development
03 and sustainability focus
Deployment of IRX is a significant opportunity across the organization; more
04 than initial view
Long-term growth vectors remain healthy; significant, identified cross-selling
05 revenue capture and margin expansion in focus
A Truly Transformational Combination and an Exciting Time – More to Come from New Ingersoll Rand
19Multi-Year Integration Effort Underway: First 100 Days Strategy, Goals and Results
COMPLETE To-Date Results
Milestone Events STATUS
PHASE 1 PHASE 2 PHASE 3 Day 1 Celebration and Global Town Hall
Global Product Planning Summit (Virtual)
i2V IR Kick-off Scheduled
May ‘19 – Nov ‘19 Dec ‘19 – Feb ‘20 Mar ‘20 – May ‘20 Global Commercial Planning Summit Scheduled
Value Stream Implementing and 100 Day 2021 – 2023 Strategic Plan Kick-off Scheduled
Mapping Planning Day 1 Readiness Execution Plan
1st Annual Leader Summit Rescheduled 2021
TEAM & PROCESS DAY 1: PLAN FAST START: IRX Process Implementation
ESTABLISHED READINESS IMPLEMENTATION
Day 1: L2 Global Organization In Place
Day 6: L3 – L5 Global Organization In Place
Major Events & Process Implementation
Week 2: Monthly Business Reviews (Globally)
Week 3: IR Operating Plan Execution (IROPE) Deployed
Week 3: IMPACT Daily Management Installs Begin Globally
Week 4: 1st Year Plan for Synergy Execution
Launched 16 RFQs Covering ~1/3 of Direct Material Spend1
Based on Process Muscle We Built in Integration Planning, We Are Executing in Line with Expectations
20 1 Based on 2019 direct material spend.Strong Additions to Our Seasoned Leadership Team
Functional Leadership
VICENTE EMILY CRAIG ANDY MIKE CHRIS CESARE
REYNAL WEAVER MUNDY SCHIESL WEATHERRED NEUBAUER TRABATTONI
CEO SVP and CFO SVP, HR, SVP, General Counsel, SVP, IRX, Strategy and VP, Global Sourcing and VP, Demand Generation,
Talent and Diversity & Chief Compliance Officer Business Development Logistics Pricing and Commercial
Inclusion and Secretary Excellence
Business Leadership
TODD GARY ARNOLD ENRIQUE M. SIA MARIA EDWARD NICK MARK
WYMAN GILLESPIE LI VISERAS ABBASZADEH BLASE BAYHI KENDALL-JONES WAGNER
SVP, Industrial VP and GM, Industrial VP and GM, Industrial VP and GM, Industrial VP and GM, Pressure VP and GM, Power Tools VP and GM, High VP and GM, Precision VP and GM, Specialty
Technologies Technologies and Technologies and Technologies and and Vacuum Solutions and Lifting Pressure Solutions and Science Vehicle Technologies
and Services Business Services, Americas Services, AP Services, EMEIA Technologies
30 Year Average Industry Experience Across Leadership Team
21 Joined from Legacy Ingersoll RandEngaged and Accountable Board of Directors
PETER STAVROS KIRK ARNOLD ELIZABETH CENTONI WILLIAM DONNELLY
Chairman | Partner, Former CEO, SVP, Retired EVP,
Co-Head of Americas Data Intensity Emerging Technology & Mettler-Toledo
Private Equity; Incubation,
Co-Chair, Inclusion Cisco Systems, Inc
and Diversity Council;
Head of Industrials, KKR
GARY FORSEE JOHN HUMPHREY MARC JONES
New directors bring expertise and Retired Chairman, Retired EVP & CFO, CEO & Chairman,
leadership in technology, entrepreneurship, President & CEO, Roper Technologies Aeris Communications, Inc.
employee engagement, innovation and Sprint Nextel Corporation
demand generation
Former President,
3 years average tenure University of Missouri System
All independent directors (other VICENTE REYNAL JOSHUA WEISENBECK TONY WHITE
than CEO)
CEO, Partner, Private Equity, Retired Chairman,
40% of Board of Directors are Ingersoll Rand KKR President & CEO,
diverse Applied Biosystems, Inc.
Director Experience and Capabilities Support Our Long-term Vision
22 Joined from Legacy Ingersoll Rand BoDMerging Strong Cultures to Enhance Our Competitive Advantages
Our Purpose: Lean On Us To Help You Make Life Better
Our Values:
We Think and Act We Are Committed to Making
Like Owners Our Customers Successful
For 160 years we have been waking up every day to help make life better. We pride ourselves on innovation, and we aim to operate in a clear,
We are driven by an entrepreneurial spirit and an ownership mindset, straightforward fashion. We aspire to be connected for life with our
inspiring us to care deeply about our neighbors and shared planet. We have customers and embrace the responsibility that comes with that. We know
a bias for action, take accountability and quickly bounce back from setbacks. they lean on us for essential, vital and mission critical solutions.
We Are Bold in Our Aspirations While Moving We Foster
Forward with Humility and Integrity Inspired Teams
We have the confidence to take on the hardest problems, yet we are rooted We nurture and celebrate a culture that embraces diverse points of views,
in a genuine sense of humility. We endeavor to earn trust every day by being backgrounds and experiences. We are committed to equity in how people
honest in our dealings and acting with integrity regardless of how hard the are treated and the opportunities available to them. And we know that a
challenge. We speak with candor, own our mistakes and always strive to be workplace which cultivates a sense of inclusion, belonging and respect will
better tomorrow. develop the most talented and capable employees.
23Increasing Our Focus on ESG – It is Now a Strategic Imperative
SAFETY SUSTAINABILITY DIVERSITY & INCLUSION
A safety-focused, zero-incident culture is Committed to sustainability in the work Nurturing and celebrating a culture that
a priority for all of us we do and the way we work embraces diverse points of view,
backgrounds and experiences
• Fostering a strong safety culture where • Solutions aid in energy savings, energy
management is personally committed, and efficiency, heat recovery, water and • CEO signed CEO Action for Diversity &
employees engaged through Safety Moments, wastewater treatment, solar power and Inclusion pledge
enhanced audits and heightened leader operator safety and ergonomics, helping to
• Focused on initiatives such as our Women’s
communication make a positive impact on the environment and
Mentoring Circles that support success and
communities worldwide
• Developed a new EHS Policy, which is being development of diverse talent
implemented globally across all businesses • Added “Operate Sustainably” as a new
strategic imperative; now a global priority • Dedicated to creating and maintaining an
• Established a new company-wide environment that allows for open conversations
Environmental Management System to • Deployed IRX to ensure execution of key ESG about diversity and inclusion
increase best practice sharing, incident tracking projects and initiatives
and corrective actions • Launched formal materiality assessment to
engage customers, employees, investors and
suppliers in defining our ESG priorities
Intense organizational-
Intend to publish new
wide effort to prepare
IR’s first ever
submittals to prominent
sustainability report
rating agencies
based on Global
including the Dow
Reporting Initiative
Jones Sustainability
(GRI) standards
Index and CDP
24Initiatives in Place to Capture Value Creation through Synergies
Run-Rate Synergy Estimate
Manufacturing
~$250M1
• Detailed database created for 14M+ sq. ft. of facilities to develop roadmap
• Phase 1 manufacturing optimization defined and under analysis
Manufacturing • Initial observations indicate strong potential for “Lean Manufacturing” as it is
deployed across enterprise
Supply Chain / Procurement
Supply Chain /
Procurement2 • Launched 16 RFQs covering ~33% of direct material spend 2; “quick wins” executed
• Leveraging current market to harmonize and secure supply chain
• Developing i2V roadmap across business with launch expected in 2H’20
Structural:
G&A and Other
Structural: G&A and Other
Cost Synergies
• Focused on simplification of structure to reduce layers and increase span of
Estimated One-Time Costs of ~$350M3 to Achieve Cost Synergies control
and ~$100M3 for Associated Stand-up of the New Company
• Opportunity to optimize Corporate functions
Plus Incremental Revenue Growth Opportunities
Accelerating Execution Given Current Environment
1We expect to be able to realize anticipated cost synergies of ~$250M by the end of year 3 after closing. We expect to incur ~$450M of expense in connection with both achieving these cost synergies and the associated
25 stand-up of the new company. 2 Based on 2019 direct material spend. 3 Excludes transaction costs.Strong Liquidity with Multiple Levers to Unlock Cash
Credit Rating • Ba2 (Positive) / BB+ (stable) from Moody’s and S&P, respectively
• Total debt of $3.5B with legacy Gardner Denver debt amended/extended at the same time as placement of new debt (all occurred in Feb. 2020)
Debt Structure and • Existing USD $928M Term Loan B repriced at L+175; 100 bps better pricing than before
Recent Actions • Existing €602M Term Loan B repriced at E+200 (with a 0% floor); 100 bps better pricing than before
(As of 2/29/20) • New USD $1.9B Term Loan B priced at L+175
• Legacy fixed interest rate swaps of $825M all expire by Sep. 2020 ($100M in Jun., $350M in Jul., and $375M in Sep.)
Maturities • No maturities until 2027
• None on term loans
Financial • $1B revolving credit facility: maximum net first lien secured debt1 to EBITDA of 6.25x, tested when 40% of revolving credit facility is utilized
Covenants • At current debt level of $3.5B and cash balance as of 12/31/19, covenant not tripped unless Adjusted EBITDA falls to ~$500M and $1B revolver usage of
at least 40%
• Cash on Gardner Denver balance sheet of $505M as of 12/31/19
• $1.0B Revolving Credit Facility (currently undrawn)
Liquidity
• $125M Receivables Financing Agreement (no outstanding borrowings as of 12/31/19 with only letters of credit committed against the facility and ~$60M of
available borrowing capacity)
• Working Capital
• AR and AP: Applying best practices, including lessons learned from Gardner Denver that helped drive 500+ bps improvement in Net Working Capital as a
% of sales from IPO in 2017 to 2019
Levers to • Inventory: Deploying Ingersoll Rand Execution Excellence (IRX) toolkit to drive sustainable inventory reduction initiatives, using same practices from
Unlock Cash Gardner Denver
• Interest Expense: Benefiting from interest expense savings on repriced loans; targeting additional savings given current interest rate environment as well as
fixed rate swaps all expiring by Q3’20
• Tax: Building funnel of opportunities to minimize cash taxes given the merger; taking advantage of payment extensions and refund opportunities
26 1 Net first lien secured debt defined as gross debt secured on a first priority basis less unrestricted cash and cash equivalents.Multiple Catalysts for Future Value Creation – Invest with Us
01. ENHANCED MARKET GROWTH OPPORTUNITY
o Expanded addressable market – ~65% larger
o Expansive installed base with opportunity to capture greater value
o Continued thoughtful portfolio optimization
02. COMPOUNDING POTENTIAL OF TWO GREAT ORGANIZATIONS
o Merging strong cultures to enhance our competitive advantages
o Embedding ESG into our way of life to drive meaningful results
o Multi-year integration effort underway
03. DURABLE BUSINESS MODEL ENABLED BY IRX
o Accelerating execution to achieve results faster through IMPACT Daily Management and Policy Deployment rigor
o Strong financial profile: outpacing market growth, margin discipline, aftermarket revenue and strong free cash flow
o Focus on achieving top-quartile industrial performance
27Appendix
Sources of Financial Data
• Supplemental Financial Information – furnished in Current Report on Form 8-K filed with SEC on April 15, 2020
• Source of financial information of the combined company in this presentation
• Excel model included on the investor section of www.irco.com
• Management’s view of supplemental historical financial information of the combined company provided to assist investors in assessing the Company’s historical
performance on a basis that includes the combined results of operations of both Gardner Denver Holdings, Inc. and the Ingersoll Rand Industrial segment
• Amendment No. 1 to Current Report on Form 8-K filed March 31, 2020
• The Company filed an amendment to its Current Report on Form 8-K filed with the SEC on March 4, 2020 to provide:
• Audited financial statements of the Industrial Business of Ingersoll-Rand plc for the years ended December 31, 2019 2018 and 2017 and the combined
balance sheets as of December 31, 2019 and 2018
• Unaudited pro forma combined financial statements of the Company as of and for the year ended December 31, 2019
https://d18rn0p25nwr6d.cloudfront.net/CIK-0001699150/4da03c43-e2f9-4b8d-86d4-6c1ddbab469d.pdf
• Registration Statement: Amendment No. 1 to Registration Statement on Form S-4 Filed January 15, 2020
• The Company filed a Registration Statement on Form S-4 with the SEC on December 30, 2019 (as amended by Amendment No. 1 to Registration Statement on
Form S-4 filed with the SEC on January 15, 2020, the “S4”) to register shares of its common stock, that were issued in connection with the merger of Charm
Merger Sub Inc. (“Merger Sub”), a wholly-owned subsidiary of Gardner Denver, with and into Ingersoll-Rand U.S. HoldCo, Inc. (“Ingersoll Rand Industrial”), which
was a wholly-owned subsidiary of Ingersoll-Rand plc (“Ingersoll Rand”), with Ingersoll Rand Industrial surviving the merger as a wholly-owned subsidiary of
Gardner Denver
• The S-4 included audited financial statements of the Industrial Business of Ingersoll-Rand plc for the years ended December 31, 2018, 2017 and 2016 and the
combined balance sheets as of December 31, 2018 and 2017 and unaudited pro forma combined financial statements of the Company as of and for the year
ended December 31, 2018
http://d18rn0p25nwr6d.cloudfront.net/CIK-0001699150/f86cb9c4-c2a9-4172-b924-fb01eb816ec2.pdf
29Supplemental Financial Information: 2019 Condensed Combined Statement of
Operations
INGERSOLL RAND INC. AND SUBSIDIARIES
UNAUDITED ADJUSTED COMBINED FINANCIAL INFORMATION
CONDENSED COMBINED STATEMENT OF OPERATIONS
(Dollars and Shares in millions, except per share amounts)
Adjusted Combined
Pro Forma Combined Financial Information
Year Ended Supplemental Year Ended
Dec 31, 2019 (a) Adjustments Dec 31, 2019
Revenues $ 6,173.2 $ (8.7) (b) $ 6,164.5
Cost of sales 4,004.4 (3.0) (c) 4,001.4
Gross profit 2,168.8 (5.7) 2,163.1
Selling and administrative expenses 1,148.2 (38.4) (c) 1,109.8
Amortization of intangible assets 359.8 - 359.8
Other operating expense, net 72.1 - 72.1
Operating income 588.7 32.7 621.4
Interest expense 156.5 - 156.5
Loss on extinguishment of debt 0.2 - 0.2
Other income, net (4.2) - (4.2)
Income before income taxes 436.2 32.7 468.9
Provision for income taxes 96.5 22.1 (d) 118.6
Net income 339.7 10.6 350.3
Less: Net earnings attributable to noncontrolling interests 2.7 - 2.7
Net income attributable to Ingersoll Rand $ 337.0 $ 10.6 $ 347.6
Basic earnings per share $ 0.81 $ 0.03 $ 0.84
Diluted earnings per share $ 0.80 $ 0.03 $ 0.83
Weighted average shares, basic 414.5 414.5
Weighted average shares, diluted 420.1 420.1
Notes to the Supplemental Adjustments to the Unaudited Condensed Combined Statement of Operations
(a) This column represents the unaudited pro forma condensed combined statement of operations giving effect to the Merger which were included as Exhibit 99.2 to the Form 8-K/A.
(b) Adjustment reflecting certain ongoing sales with Trane Technologies per the Transition Services Agreement that will be sold at zero margin post-Merger.
(c) Adjustment reflecting the removal of certain corporate expenses allocated to the Ingersoll Rand Industrial Segment by its former parent (inclusive of corporate expenses allocated to
Precision Flow Systems by its former parent) recorded in connection with the carve-out financial statements which did not convey with the Ingersoll Rand Industrial Segment.
(d) Adjustment reflecting the application of the effective tax rate of 25.3% to all of the supplemental pro forma adjustments previously discussed above and additional tax provision related
to Global Intangible Low-Taxed Income (“GILTI”) and income as defined under Subpart F of the Internal Revenue Code (“Subpart F”).
30Supplemental Financial Information: 2018 Condensed Combined Statement of
Operations INGERSOLL RAND INC. AND SUBSIDIARIES
UNAUDITED ADJUSTED COMBINED FINANCIAL INFORMATION
CONDENSED COMBINED STATEMENT OF OPERATIONS
(Dollars and Shares in millions, except per share amounts)
Adjusted Combined
Pro Forma Combined Financial Information
Year Ended Supplemental Year Ended
Dec 31, 2018 (a) Adjustments Dec 31, 2018
Revenues $ 6,460.3 $ (6.2) (b) $ 6,454.1
Cost of sales 4,168.1 (1.7) (c) 4,166.4
Gross profit 2,292.2 (4.5) 2,287.7
Selling and administrative expenses 1,198.2 (45.8) (c) 1,152.4
Amortization of intangible assets 361.3 - 361.3
Other operating expense, net 70.5 - 70.5
Operating income 662.2 41.3 703.5
Interest expense 170.3 (3.1) (d) 167.2
Loss on extinguishment of debt 1.1 - 1.1
Other income, net (8.8) - (8.8)
Income before income taxes 499.6 44.4 544.0
Provision for income taxes 116.6 18.3 (e) 134.9
Net income 383.0 26.1 409.1
Less: Net earnings attributable to noncontrolling interests 2.6 - 2.6
Net income attributable to Ingersoll Rand $ 380.4 $ 26.1 $ 406.5
Basic earnings per share $ 0.92 $ 0.06 $ 0.98
Diluted earnings per share $ 0.90 $ 0.07 $ 0.97
Weighted average shares, basic 412.9 412.9
Weighted average shares, diluted 420.5 420.5
Notes to the Supplemental Adjustments to the Unaudited Condensed Combined Statement of Operations
(a) This column represents the unaudited pro forma condensed combined statement of operations giving effect to the Merger which were included in the Form S-4.
(b) Adjustment reflecting certain ongoing sales with Trane Technologies per the Transition Services Agreement that will be sold at zero margin post-Merger.
(c) Adjustment reflecting the removal of certain corporate expenses allocated to the Ingersoll Rand Industrial segment by its former Parent (inclusive of corporate expenses
allocated to Precision Flow Systems by its former Parent) recorded in connection with the carve-out financial statements which did not convey with the Ingersoll Rand
Industrial segment.
(d) Adjustment reflecting the removal of pro forma interest expense included in the unaudited pro forma condensed combined statement of operations included in the Form S-4.
The original pro forma interest expense amount was calculated using the best available estimated interest rates at the time the Form S-4 was filed. This incremental adjustment
reflects a change in the interest expense calculation due to the application of actual agreed upon interest rates confirmed in the new borrowing facility.
(e) Adjustment reflecting the application of the effective tax rate of 24.8% to all of the supplemental pro forma adjustments previously discussed above and additional tax
31
provision related to GILTI and Subpart F.Supplemental Financial Information: 2019 and 2018 Combined Financial Information
by Segment
INGERSOLL RAND INC. AND SUBSIDIARIES
UNAUDITED ADJUSTED COMBINED FINANCIAL INFORMATION BY SEGMENT
(Dollars and Shares in millions, except per share amounts)
Year ended Quarter ended Year ended
Dec 31, 2019 Dec 31, 2019 Sep 30, 2019 Jun 30, 2019 Mar 31, 2019 Dec 31, 2018
Ingersoll Rand
Adjusted Revenue (non-GAAP) $ 6,164.5 $ 1,588.4 $ 1,481.0 $ 1,595.5 $ 1,499.6 $ 6,454.1
Adjusted EBITDA (non-GAAP) 1,196.5 314.2 293.8 313.1 275.4 1,294.9
Adjusted EBITDA Margin (non-GAAP) 19.4% 19.8% 19.8% 19.6% 18.4% 20.1%
Further Adjusted Net Income (non-GAAP) 690.8 184.4 169.0 183.3 154.1 755.3
Further Adjusted Diluted EPS (non-GAAP) $ 1.64 $ 0.44 $ 0.39 $ 0.44 $ 0.37 $ 1.80
Industrial Technologies & Services
Adjusted Revenue (non-GAAP) $ 4,057.5 $ 1,069.8 $ 984.0 $ 1,027.5 $ 976.2 $ 4,216.1
Adjusted EBITDA (non-GAAP) 816.1 236.0 199.8 199.5 180.8 825.6
Adjusted EBITDA Margin (non-GAAP) 20.1% 22.1% 20.3% 19.4% 18.5% 19.6%
Precision & Science Technologies
Adjusted Revenue (non-GAAP) $ 850.3 $ 213.2 $ 208.0 $ 215.5 $ 213.6 $ 818.5
Adjusted EBITDA (non-GAAP) 235.9 59.4 56.6 63.4 56.5 208.7
Adjusted EBITDA Margin (non-GAAP) 27.7% 27.9% 27.2% 29.4% 26.5% 25.5%
Specialty Vehicle Technologies
Adjusted Revenue (non-GAAP) $ 822.3 $ 226.4 $ 189.0 $ 233.0 $ 173.9 $ 749.4
Adjusted EBITDA (non-GAAP) 116.7 32.9 27.6 37.6 18.6 104.3
Adjusted EBITDA Margin (non-GAAP) 14.2% 14.5% 14.6% 16.1% 10.7% 13.9%
High Pressure Solutions
Adjusted Revenue (non-GAAP) $ 434.4 $ 79.0 $ 100.0 $ 119.5 $ 135.9 $ 670.1
Adjusted EBITDA (non-GAAP) 117.4 16.0 26.9 32.6 41.9 227.9
Adjusted EBITDA Margin (non-GAAP) 27.0% 20.3% 26.9% 27.3% 30.8% 34.0%
32Supplemental Financial Information: 2019 and 2018 Combined Revenue Growth /
(Decline) by Segment INGERSOLL RAND INC. AND SUBSIDIARIES
UNAUDITED ADJUSTED COMBINED REVENUE GROWTH / (DECLINE) BY SEGMENT
(Dollars and Shares in millions, except per share amounts)
Year ended Quarter ended Year ended
Dec 31, 2019 Dec 31, 2019 Sep 30, 2019 Jun 30, 2019 Mar 31, 2019 Dec 31, 2018
Ingersoll Rand
Organic growth (decline) (non-GAAP) (3.0%) (7.1%) (5.8%) (0.9%) 2.3% 9.0%
Impact of foreign currency (non-GAAP) (2.2%) (1.0%) (1.7%) (2.7%) (3.6%) 1.1%
Impact of acquisitions (non-GAAP) 0.7% 0.4% 0.6% 0.6% 1.3% 1.3%
Total adjusted revenue growth (decline) (non-GAAP) (4.5%) (7.7%) (6.9%) (3.0%) -% 11.4%
Industrial Technologies & Services
Organic growth (decline) (non-GAAP) (1.6%) (5.4%) (3.4%) (0.9%) 4.1% 6.9%
Impact of foreign currency (non-GAAP) (2.7%) (1.2%) (2.1%) (3.4%) (4.6%) 1.2%
Impact of acquisitions (non-GAAP) 0.5% 0.3% 0.3% 0.3% 1.3% 1.8%
Total adjusted revenue growth (decline) (non-GAAP) (3.8%) (6.3%) (5.2%) (4.0%) 0.8% 9.9%
Precision & Science Technologies
Organic growth (decline) (non-GAAP) 3.5% 0.8% (0.3%) 4.9% 9.1% 12.5%
Impact of foreign currency (non-GAAP) (2.4%) (1.2%) (1.9%) (2.9%) (3.9%) 2.0%
Impact of acquisitions (non-GAAP) 2.8% 1.9% 2.9% 3.1% 3.2% 0.1%
Total adjusted revenue growth (non-GAAP) 3.9% 1.5% 0.7% 5.1% 8.4% 14.6%
Specialty Vehicle Technologies
Organic growth (non-GAAP) 10.3% 7.9% 17.6% 13.3% 2.8% 12.8%
Impact of foreign currency (non-GAAP) (0.6%) (0.3%) (0.4%) (0.7%) (1.0%) 0.4%
Impact of acquisitions (non-GAAP) -% -% -% -% -% -%
Total adjusted revenue growth (non-GAAP) 9.7% 7.6% 17.2% 12.6% 1.8% 13.2%
High Pressure Solutions
Organic growth (decline) (non-GAAP) (35.1%) (49.8%) (45.9%) (26.5%) (17.2%) 14.6%
Impact of foreign currency (non-GAAP) (0.3%) (0.5%) (0.3%) (0.3%) (0.4%) -%
Impact of acquisitions (non-GAAP) 0.3% -% -% 0.4% 0.8% 1.0%
Total adjusted revenue growth (decline) (non-GAAP) (35.1%) (50.3%) (46.2%) (26.4%) (16.8%) 15.6%
(1) Organic growth/(decline), impact of foreign currency, and impact of acquisitions are non-GAAP measures. References to “impact of acquisitions” refer to GAAP sales from acquired
businesses recorded prior to the first anniversary of the acquisition. The portion of GAAP revenue attributable to currency translation is calculated as the difference between (a) the period-to-period
change in revenue (excluding acquisition sales) and (b) the period-to-period change in revenue (excluding acquisition sales) after applying prior year foreign exchange rates to the current year period.
33Supplemental Financial Information: 2019 and 2018 Reconciliation of Adjusted Net Income and
Diluted EPS to Further Adjusted Net Income and Further Adjusted Diluted EPS
INGERSOLL RAND INC. AND SUBSIDIARIES
UNAUDITED ADJUSTED COMBINED FINANCIAL INFORMATION
RECONCILIATION OF ADJUSTED NET INCOME AND DILUTED EPS TO
FURTHER ADJUSTED NET INCOME AND FURTHER ADJUSTED DILUTED EPS
(Dollars and Shares in millions, except per share amounts)
Year ended Quarter ended Year ended
Dec 31, 2019 Dec 31, 2019 Sep 30, 2019 Jun 30, 2019 Mar 31, 2019 Dec 31, 2018
Adjusted Net Income (1) $ 350.3 $ 104.1 $ 90.4 $ 93.6 $ 62.2 $ 409.1
Adjusted Diluted Earnings Per Share (1) $ 0.83 $ 0.25 $ 0.21 $ 0.22 $ 0.15 $ 0.97
Plus:
Amortization of acquisition related intangible assets (a) $ 348.0 $ 86.9 $ 86.8 $ 87.0 $ 87.3 $ 347.4
Acquisition related expenses and non-cash charges (b) 9.7 4.4 2.1 1.6 1.6 16.7
Restructuring and related business transformation costs (c) 63.1 15.1 17.8 15.1 15.1 84.5
Stock-based compensation (d) 32.4 8.8 2.9 9.1 11.6 17.8
Foreign currency transaction losses (gains), net 7.2 5.3 (2.2) 1.6 2.5 (0.6)
Shareholder litigation settlement recoveries (e) (6.0) - - - (6.0) (9.5)
Other adjustments (f) 0.7 - - - 0.7 4.1
Minus:
Income tax provisions, as adjusted (g) 114.6 40.2 28.8 24.7 20.9 114.2
Further Adjusted Net Income $ 690.8 $ 184.4 $ 169.0 $ 183.3 $ 154.1 $ 755.3
Further Adjusted Diluted Earnings Per Share $ 1.64 $ 0.44 $ 0.39 $ 0.44 $ 0.37 $ 1.80
Average Shares Outstanding:
Diluted shares outstanding 208.9 209.4 209.0 208.9 207.7 209.1
Effects of transaction 211.3 211.3 211.3 211.3 211.3 211.3
Adjusted diluted shares outstanding 420.2 420.7 420.3 420.2 419.0 420.4
(1) See tables on slides 30 and 31 for the years ended December 31, 2019 and December 31, 2018, respectively, for a reconciliation of unaudited pro forma Net Income and unaudited
pro forma Diluted EPS as previously disclosed in SEC filings in accordance with Article 11 of Regulation S-X to these adjusted measures presented above.
34Supplemental Financial Information: 2019 and 2018 Reconciliation of Adjusted Diluted
EPS to Further Adjusted Diluted EPS
INGERSOLL RAND INC. AND SUBSIDIARIES
UNAUDITED ADJUSTED COMBINED FINANCIAL INFORMATION
RECONCILIATION OF ADJUSTED DILUTED EPS TO FURTHER ADJUSTED DILUTED EPS
(Share amounts in millions, per share amounts in whole dollars)
Year ended Quarter ended Year ended
Dec 31, 2019 Dec 31, 2019 Sep 30, 2019 Jun 30, 2019 Mar 31, 2019 Dec 31, 2018
Adjusted Diluted Earnings Per Share (1) $ 0.83 $ 0.25 $ 0.21 $ 0.22 $ 0.15 $ 0.97
Plus:
Amortization of acquisition related intangible assets (a) 0.83 0.20 0.21 0.21 0.21 0.83
Acquisition related expenses and non-cash charges (b) 0.01 0.01 - - - 0.04
Restructuring and related business transformation costs (c) 0.15 0.04 0.04 0.04 0.03 0.20
Stock-based compensation (d) 0.08 0.02 0.01 0.02 0.03 0.04
Foreign currency transaction losses (gains), net 0.01 0.01 (0.01) - 0.01 -
Shareholder litigation settlement recoveries (e) (0.01) - - - (0.01) (0.02)
Other adjustments (f) - - - - - 0.01
Minus: -
Income tax provisions, as adjusted (g) 0.26 0.09 0.07 0.05 0.05 0.27
Further Adjusted Diluted Earnings Per Share $ 1.64 $ 0.44 $ 0.39 $ 0.44 $ 0.37 $ 1.80
(1) See tables on slides 30 and 31 for the years ended December 31, 2019 and December 31, 2018, respectively, for a reconciliation of unaudited pro forma Diluted EPS as previously
disclosed in SEC filings in accordance with Article 11 of Regulation S-X to Adjusted Diluted EPS presented above.
35Supplemental Financial Information: 2019 and 2018 Reconciliation of Adjusted Net
Income to Adjusted EBITDA and Further Adjusted Net Income
INGERSOLL RAND INC. AND SUBSIDIARIES
UNAUDITED ADJUSTED COMBINED FINANCIAL INFORMATION
RECONCILIATION OF ADJUSTED NET INCOME TO
ADJUSTED EBITDA AND FURTHER ADJUSTED NET INCOME
(Dollars and Shares in millions, except per share amounts)
Year ended Quarter ended Year ended
Dec 31, 2019 Dec 31, 2019 Sep 30, 2019 Jun 30, 2019 Mar 31, 2019 Dec 31, 2018
Adjusted Net Income (1) $ 350.3 $ 104.1 $ 90.4 $ 93.6 $ 62.2 $ 409.1
Plus:
Interest expense $ 156.5 $ 37.8 $ 40.1 $ 39.3 $ 39.3 $ 167.2
Provision for income taxes 118.6 22.1 28.2 37.2 31.1 134.9
Depreciation expense 95.8 24.0 23.0 23.8 25.0 99.3
Amortization expense (a) 368.2 92.6 91.5 91.8 92.3 371.4
Acquisition related expenses and non-cash charges (b) 9.7 4.4 2.1 1.6 1.6 16.7
Restructuring and related business transformation costs (c) 63.1 15.1 17.8 15.1 15.1 84.5
Stock-based compensation (d) 32.4 8.8 2.9 9.1 11.6 17.8
Foreign currency transaction losses (gains), net 7.2 5.3 (2.2) 1.6 2.5 (0.6)
Shareholder litigation settlement recoveries (e) (6.0) - - - (6.0) (9.5)
Other adjustments (f) 0.7 - - - 0.7 4.1
Adjusted EBITDA $ 1,196.5 $ 314.2 $ 293.8 $ 313.1 $ 275.4 $ 1,294.9
Minus:
Interest expense $ 156.5 $ 37.8 $ 40.1 $ 39.3 $ 39.3 $ 167.2
Income tax provision, as adjusted (g) 233.2 62.3 57.0 61.9 52.0 249.1
Depreciation expense 95.8 24.0 23.0 23.8 25.0 99.3
Amortization of non-acquisition related intangible assets (a) 20.2 5.7 4.7 4.8 5.0 24.0
Further Adjusted Net Income $ 690.8 $ 184.4 $ 169.0 $ 183.3 $ 154.1 $ 755.3
(1) See tables on slides 30 and 31 for the years ended December 31, 2019 and December 31, 2018, respectively, for a reconciliation of unaudited pro forma Net income as previously
disclosed in SEC filings in accordance with Article 11 of Regulation S-X to Adjusted Net income presented above.
36Supplemental Financial Information: 2019 and 2018 Reconciliation of Segment
Adjusted EBITDA to Adjusted Income Before Income Taxes
INGERSOLL RAND INC. AND SUBSIDIARIES
UNAUDITED ADJUSTED COMBINED FINANCIAL INFORMATION
RECONCILIATION OF SEGMENT ADJUSTED EBITDA TO ADJUSTED INCOME BEFORE INCOME TAXES
(Dollars and Shares in millions, except per share amounts)
Year ended Quarter ended Year ended
Dec 31, 2019 Dec 31, 2019 Sep 30, 2019 Jun 30, 2019 Mar 31, 2019 Dec 31, 2018
Adjusted Revenue
Industrial Technologies & Services $ 4,057.5 $ 1,069.8 $ 984.0 $ 1,027.5 $ 976.2 $ 4,216.1
Precision & Science Technologies 850.3 213.2 208.0 215.5 213.6 818.5
Specialty Vehicle Technologies 822.3 226.4 189.0 233.0 173.9 749.4
High Pressure Solutions 434.4 79.0 100.0 119.5 135.9 670.1
Total Adjusted Revenue (1) $ 6,164.5 $ 1,588.4 $ 1,481.0 $ 1,595.5 $ 1,499.6 $ 6,454.1
Segment Adjusted EBITDA
Industrial Technologies & Services $ 816.1 $ 236.0 $ 199.8 $ 199.5 $ 180.8 $ 825.6
Precision & Science Technologies 235.9 59.4 56.6 63.4 56.5 208.7
Specialty Vehicle Technologies 116.7 32.9 27.6 37.6 18.6 104.3
High Pressure Solutions 117.4 16.0 26.9 32.6 41.9 227.9
Total Segment Adjusted EBITDA $ 1,286.1 $ 344.3 $ 310.9 $ 333.1 $ 297.8 $ 1,366.5
Less items to reconcile Segment Adjusted EBITDA to Adjusted Income Before Income Taxes:
Corporate expenses not allocated to segments $ 89.6 $ 30.1 $ 17.1 $ 20.0 $ 22.4 $ 71.6
Interest expense 156.5 37.8 40.1 39.3 39.3 167.2
Depreciation and amortization expense 464.0 116.6 114.5 115.6 117.3 470.7
Acquisition related expenses and non-cash charges (b) 9.7 4.4 2.1 1.6 1.6 16.7
Restructuring and related business transformation costs (c) 63.1 15.1 17.8 15.1 15.1 84.5
Stock-based compensation (d) 32.4 8.8 2.9 9.1 11.6 17.8
Foreign currency transaction losses (gains), net 7.2 5.3 (2.2) 1.6 2.5 (0.6)
Shareholder litigation settlement recoveries (e) (6.0) - - - (6.0) (9.5)
Other adjustments (f) 0.7 - - - 0.7 4.1
Adjusted Income Before Income Taxes (1) $ 468.9 $ 126.2 $ 118.6 $ 130.8 $ 93.3 $ 544.0
(1) See tables on slides 30 and 31 for the years ended December 31, 2019 and December 31, 2018, respectively, for a reconciliation of unaudited pro forma Revenue and unaudited pro forma
Income Before Income Taxes as previously disclosed in SEC filings in accordance with Article 11 of Regulation S-X to these adjusted measures presented above.
37Supplemental Financial Information: Notes to Slides 34-37 - Adjusted Combined
Financial Information
All supplemental financial information presented in this document represents the newly combined Ingersoll Rand giving effect to the Merger as if it happened on January 1, 2018.
(a) Amortization expense consisted of the following:
Year ended Quarter ended Year ended
Dec 31, 2019 Dec 31, 2019 Sep 30, 2019 Jun 30, 2019 Mar 31, 2019 Dec 31, 2018
Amortization of acquisition-related intangible assets $ 348.0 $ 86.9 $ 86.8 $ 87.0 $ 87.3 $ 347.4
Amortization of non-acquisition related intangible assets 20.2 5.7 4.7 4.8 5.0 24.0
Total amortization expense $ 368.2 $ 92.6 $ 91.5 $ 91.8 $ 92.3 $ 371.4
(b) Represents costs associated with successful and/or abandoned acquisitions, including third-party expenses, post-closure integration costs (including certain incentive and non-incentive
cash compensation costs), and non-cash charges and credits arising from fair value purchase accounting adjustments.
(c) Restructuring and related business transformation costs consisted of the following:
Year ended Quarter ended Year ended
Dec 31, 2019 Dec 31, 2019 Sep 30, 2019 Jun 30, 2019 Mar 31, 2019 Dec 31, 2018
Restructuring charges $ 54.6 $ 11.7 $ 16.0 $ 13.9 $ 13.0 $ 62.6
Severance, sign-on, relocation and executive search costs 2.5 1.2 0.1 0.2 1.0 4.1
Facility reorganization, relocation and other costs 2.4 0.5 0.8 0.5 0.6 3.1
Information technology infrastructure transformation 1.2 0.3 0.2 0.4 0.3 0.8
Losses (gains) on asset and business disposals 0.8 0.9 0.2 (0.4) 0.1 (5.3)
Consultant and other advisor fees 0.3 - 0.1 0.1 0.1 14.1
Other, net 1.3 0.5 0.4 0.4 - 5.1
Total restructuring and related business transformation costs $ 63.1 $ 15.1 $ 17.8 $ 15.1 $ 15.1 $ 84.5
(d) Represents stock-based compensation expense recognized for stock options outstanding of $30.8 million and $17.8 million for the years ended December 31, 2019 and 2018,
respectively. Represents stock-based compensation expense recognized for stock options outstanding of $8.7 million, $2.7 million, $9.0 million and $10.4 million for the quarters ended
December 31, 2019, September 30, 2019, June 30, 2019 and March 31, 2019, respectively.
(e) Represents insurance recoveries of our shareholder litigation settlement in 2014.
38You can also read
