Ingersoll Rand (IR) Q1 Earnings & Revenues Top Estimates

Ingersoll Rand Inc. IR reported better-than-expected first-quarter 2022 results, wherein earnings surpassed estimates by 8.9%, and sales beat the same by 3.2%.

Its adjusted quarterly earnings were 49 cents per share, reflecting growth of 25.6% from the year-ago quarter’s 39 cents. The bottom line surpassed the Zacks Consensus Estimate of 45 cents.

Revenue Details

In the quarter under review, Ingersoll Rand’s revenues of $1,337 million reflected growth of 18.4% from the year-ago quarter’s number. The increase was primarily attributable to organic revenue growth of 13.9%, a positive impact of 6.8% from acquisitions, partially offset by the adverse impact of 2.3% from movements in foreign currencies.

The company’s revenues surpassed the Zacks Consensus Estimate of $1,295 million.

Orders in the quarter totaled $1,629.9 million, increasing 25.3% from the year-ago quarter’s number.

It is worth noting here that the divested businesses of Specialty Vehicle Technologies and High Pressure Solutions have been classified as discontinued operations, beginning second-quarter 2021.

The company now reports revenues under two segments. A brief discussion of the quarterly results is provided below:

Industrial Technologies & Services generated revenues of $1,039.6 million, accounting for 77.8% of net revenues in the reported quarter. Sales increased 13.8% year over year on 14.4% growth in organic sales. Acquisitions contributed 1.5%, while movements in foreign currencies had a negative impact of 2.1%. The segment’s orders in the quarter grew 24%.

Precision & Science Technologies’ revenues totaled $289.8 million, representing 20.4% of net revenues in the quarter. On a year-over-year basis, the segment’s revenues increased 37.9%. Organic sales grew 11.5%. Acquisitions had a positive impact of 29.7%, while movements in foreign currencies had a negative impact of 3.3%. The segment’s orders were up 30.6%.

Ingersoll Rand Inc. Price, Consensus and EPS Surprise

Ingersoll Rand Inc. Price, Consensus and EPS Surprise

Ingersoll Rand Inc. price-consensus-eps-surprise-chart | Ingersoll Rand Inc. Quote

Margin Profile

Adjusted earnings before interest, tax, depreciation and amortization (EBITDA) in the quarter increased 24.4% year over year to $303.6 million. Margins increased 110 basis points (bps) to 22.7%.

On a segmental basis, adjusted EBITDA margin increased 70 bps year over year to 23.8% for the Industrial Technologies & Services and contracted 260 bps to 28.6% for the Precision & Science Technologies.

Balance Sheet & Cash Flow

Exiting the first quarter of 2022, Ingersoll Rand had cash and cash equivalents of $1,990.2 million, decreasing from $2,109.6 million recorded in the last reported quarter. Long-term debt was $3,375.6 million, down 0.8% sequentially.

In the first three months of 2022, the company repaid $9.6 million of long-term debts and repurchased shares worth $101.1 million.

Its liquidity of $3.1 billion at the end of the first quarter comprised cash of $2 billion and credit under revolving facilities of $1.1 billion.

In the first three months of 2022, it generated net cash of $50.1 million from operating activities, decreasing 42.7% year over year. Capital expenditure totaled $17.9 million compared with $14.3 million in the year-ago quarter. Free cash flow decreased 56% to $32.2 million.

Outlook

For 2022, Ingersoll Rand anticipates year-over-year revenue growth of 11-13% (8-10% on an organic basis). Foreign currency translation is anticipated to hurt sales by 2% in 2022. Contribution from mergers/acquisitions is anticipated to be $225 million.

For the Industrial Technologies & Services segment, the company expects organic sales growth of 8-10%, while the same for the Precision & Science Technologies is anticipated to be 9-11%.

Adjusted EBITDA is anticipated to be $1.385-$1.425 billion for the year.

Zacks Rank & Stocks to Consider

The company currently carries a Zacks Rank #4 (Sell).

Some better-ranked companies from the industrial products sector are discussed below.

AZZ Inc. AZZ presently carries a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here. Its earnings surprise for the last four quarters was 22.3%, on average.

AZZ’s earnings estimates increased 12.6% for fiscal 2022 (ending February 2022) in the past 60 days. Its shares have inched up 0.5% in the past three months.

Graphic Packaging Holding Company GPK presently sports a Zacks Rank #1. Its earnings surprise in the last four quarters was 7.2%, on average.

In the past 60 days, GPK’s earnings estimates have increased 7.6% for 2022. The stock has rallied 22.3% in the past three months.

Ferguson plc FERG presently carries a Zacks Rank of 2 (Buy). FERG delivered a trailing four-quarter earnings surprise of 14.2%, on average.

Earnings estimates of Ferguson have increased 6.5% for fiscal 2022 (ending July 2022) in the past 60 days. FERG’s shares have declined 16.3% in the past three months.

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