Ingersoll Rand (IR) Q1 Earnings Beat, Revenues Up 21.9% Y/Y
Ingersoll Rand Inc. IR reported first-quarter 2023 adjusted earnings of 63 cents per share, which beat the Zacks Consensus Estimate of earnings of 48 cents per share. Our estimate for first-quarter adjusted earnings was 52 cents per share. The bottom line increased 40% year over year.
Total revenues of $1,629.3 million outperformed the Zacks Consensus Estimate of $1,480 million. Our estimate for first-quarter revenues was $1,470.0 million. The top line increased 21.9% year over year on a 20.4% rise in organic revenues. Acquisitions contributed 5.8% to revenues, while foreign currency movements had an adverse impact of 4.3%.
Orders in the quarter totaled $1,776.8 million, up 9% from the year-ago quarter. Organically orders increased 7.6%.
Segmental Discussion
The Industrial Technologies & Services segment generated revenues of $1,317.2 million, accounting for 80.4% of net revenues in the reported quarter. Our estimate for segmental revenues was $1,147.7 million. Sales increased 26.7% year over year on 24.5% growth in organic sales. Acquisitions contributed 6.7%, while movement in foreign currencies had a negative impact of 4.5%. The segment’s orders in the quarter were up 12.2% (up 10% organically).
The Precision & Science Technologies segment’s revenues totaled $312.1 million, representing 19.6% of net revenues in the quarter. Our estimate for segmental revenues was $322.3 million. On a year-over-year basis, the segment’s revenues increased 4.9%. Organic sales grew 6%. Acquisitions had a positive impact of 2.4%, while movement in foreign currencies had a negative impact of 3.5%. The segment’s orders were down 3.1% (down 1.7% organically).
Ingersoll Rand Inc. Price, Consensus and EPS Surprise
Ingersoll Rand Inc. price-consensus-eps-surprise-chart | Ingersoll Rand Inc. Quote
Margin Profile
Adjusted EBITDA in the quarter increased 32.4% year over year to $440.1 million. The margin increased to 24.6% from 22.7% in the year-ago period.
On a segmental basis, the adjusted EBITDA margin increased 240 basis points (bps) year over year to 26.2% for the Industrial Technologies & Services segment. The same increased 170 bps to 30.3% for the Precision & Science Technologies segment.
Balance Sheet & Cash Flow
While exiting the first quarter of 2023, Ingersoll Rand had cash and cash equivalents of $1,119.3 million, compared with $1,613.0 million recorded at the end of December 2022. Long-term debt (less current maturities) was $2,708.8 million, compared with $2,716.1 million in December 2022.
In the first three months of 2023, this Zacks Rank #1 (Strong Buy) company returned $85.1 million to shareholders through dividends and share buybacks.
In the same time period, IR generated net cash of $170.3 million from operating activities, up 239.9% year over year. Capital expenditure totaled $22.4 million, compared with $17.9 million in the year-ago quarter. Free cash flow increased 359.3% to $147.9 million.
2023 Outlook
For 2023, Ingersoll Rand expects revenues to increase 10-12%, compared with 7-9% predicted earlier. Organic revenues are estimated to increase 6-8%, compared with 3-5% predicted before. The Industrial Technologies & Services segment’s revenues are predicted to increase 6-8% organically, compared with 3-5% expected earlier, while the Precision & Science Technologies segment’s revenues are forecast to climb 5-7% organically, compared with 4-6% predicted earlier. Adverse foreign currency movements are expected to have no impact on total revenues.
Adjusted EBITDA is expected to be $1,660-1,710 million, indicating an increase of 16-19% year over year. Adjusted earnings are anticipated to be $2.64-2.74 per share, indicating an increase of 11-16%. The company expected adjusted earnings of $2.48-$2.58 per share earlier.
Other Stocks to Consider
Some other top-ranked companies from the Industrial Products sector are discussed below:
Parker-Hannifin Corporation PH presently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks.
The company delivered a trailing four-quarter earnings surprise of 9.1%, on average. In the past 60 days, estimates for Parker-Hannifin’s fiscal 2023 (ending June 2023) earnings have increased 0.5%. The stock has gained 7.5% in the past six months.
Allegion plc ALLE presently carries a Zacks Rank of 2. ALLE’s earnings surprise in the last four quarters was 12.5%, on average.
In the past 60 days, Allegion’s earnings estimates have increased 4.1% for 2023. The stock has gained 1.7% in the past six months.
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