On October 31, 2024, Ingersoll Rand Inc (IR, Financial) released its 8-K filing detailing its third-quarter 2024 financial results. Ingersoll Rand, formed through the merger of Gardner Denver and Ingersoll Rand's industrial segment, operates in two main business lines: industrial technologies and services, and precision and science technologies. The company serves diverse markets, including industrial, medical, and energy, with a broad product portfolio that generated approximately $6.9 billion in revenue in 2023.
Quarterly Performance Overview
Ingersoll Rand reported third-quarter revenues of $1,861 million, a 7% increase from the previous year but slightly below the analyst estimate of $1,874.06 million. However, the company exceeded earnings expectations with an adjusted EPS of $0.84, surpassing the estimated $0.62. The reported net income attributable to Ingersoll Rand was $222 million, or $0.54 per share.
The company's performance was bolstered by its Ingersoll Rand Execution Excellence (IRX) strategy, which drove a 10% increase in orders to $1,799 million. Adjusted EBITDA rose by 15% to $533 million, with a margin expansion of 210 basis points to 28.6%.
Financial Achievements and Challenges
Ingersoll Rand's financial achievements highlight its robust operational execution. The company reported a gross margin improvement of 130 basis points and a free cash flow margin of 20%, with free cash flow increasing by 2% to $374 million. Liquidity remained strong at $4.0 billion, including $1.4 billion in cash and $2.6 billion in undrawn credit facilities.
Despite these achievements, the company faces challenges in organic growth, particularly in its Industrial Technologies and Services segment, where organic revenues declined by 2%. The Precision and Science Technologies segment also saw a 3% organic revenue decline, despite a 30% increase in reported orders.
Segment Performance and Strategic Initiatives
The Industrial Technologies and Services segment reported revenues of $1,467 million, a 3% increase, while the Precision and Science Technologies segment saw a 27% revenue increase to $394 million. The company continues to focus on strategic acquisitions to enhance its market position, completing several acquisitions in October, including Air Power Systems Co., LLC, and Bluetek s.r.l.
“Our Economic Growth Engine remains on track to deliver our long-term Investor Day targets of double-digit Adjusted EPS growth and strong free cash flow generation,” said Vicente Reynal, chairman and chief executive officer of Ingersoll Rand.
Financial Statements and Key Metrics
Ingersoll Rand's balance sheet reflects a net debt to Adjusted EBITDA leverage of 1.7x, influenced by the acquisition of ILC Dover. The company invested $30 million in capital expenditures and returned $71 million to shareholders through share repurchases and dividends.
| Metric | Q3 2024 | Q3 2023 |
|---|---|---|
| Revenue | $1,861 million | Up 7% |
| Net Income | $222 million | N/A |
| Adjusted EPS | $0.84 | N/A |
| Adjusted EBITDA | $533 million | Up 15% |
Analysis and Outlook
Ingersoll Rand's third-quarter results demonstrate its ability to achieve strong earnings growth despite revenue challenges. The company's strategic focus on acquisitions and operational excellence positions it well for future growth. However, the decline in organic revenue growth highlights the need for continued innovation and market expansion.
Ingersoll Rand has updated its full-year 2024 guidance, projecting total revenue growth of 5% to 7% and adjusted EPS growth of 11% to 13%. The company's commitment to capital deployment and innovation is expected to drive sustainable long-term value.
Explore the complete 8-K earnings release (here) from Ingersoll Rand Inc for further details.
