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Ingersoll Rand (IR) Q4 Earnings Top Estimates, Revenues Miss

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Ingersoll Rand Inc. IR reported mixed fourth-quarter 2021 results, wherein earnings surpassed estimates by 11.5%, but sales lagged the same by 0.1%.

Its adjusted quarterly earnings were 68 cents per share, reflecting growth of 28.3% from the year-ago quarter’s 53 cents. The bottom line surpassed the Zacks Consensus Estimate of 61 cents.

In 2021, the company’s earnings came in at $2.09, an increase of 56% on a year-over-year basis.

Revenue Details

In the quarter under review, Ingersoll Rand’s revenues of $1,418.8 million reflected growth of 16.4% from the year-ago quarter’s number. The increase was primarily attributable to organic revenue growth of 11.3%, positive impact of 6.3% from acquisitions, partially offset by the adverse impact of 1.2% from movements in foreign currencies.

The company’s revenues missed the Zacks Consensus Estimate of $1,421 million.

Orders in the quarter totaled $1,507 million, increasing 24% 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 $1,129 million, accounting for 79.6% of net revenues in the reported quarter. Sales increased 11.6% year over year on 10.6% growth in organic sales. Acquisitions contributed 2.1%, while movements in foreign currencies had a negative impact of 1.1%. The segment’s orders in the quarter grew 20.5%.

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 40.3%. Organic sales grew 15%. Acquisitions had a positive impact of 26.8%, while movements in foreign currencies had a negative impact of 1.5%. The segment’s orders were up 38.9%.

In 2021, the company’s revenues came in at $5,152.4 million.

Ingersoll Rand Inc. Price, Consensus and EPS Surprise

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 15.1% year over year to $342 million. Margins decreased 20 basis points (bps) to 24.1%.

On a segmental basis, adjusted EBITDA margin decreased 40 bps year over year to 25.7% for the Industrial Technologies & Services and contracted 400 bps to 26.8% for the Precision & Science Technologies.

Balance Sheet & Cash Flow

Exiting the fourth quarter of 2021, Ingersoll Rand had cash and cash equivalents of $2,109.6 million, increasing from $2,033 million recorded in the last reported quarter. Long-term debt was $3,401.8 million, down 0.6% sequentially.

In 2021, the company repaid $435.7 million of long-term debts and repurchased shares worth $736.8 million.

Its liquidity of $3.2 billion at the end of the fourth quarter comprised cash of $2.1 billion and credit under revolving facilities of $1.1 billion.

In 2021, it generated net cash of $627.8 million from operating activities, decreasing 3.9% from 2020. Capital expenditure totaled $64.1 million compared with $42 million in the previous year. Free cash flow decreased 7.8% to $563.7 million.

Outlook

Ingersoll Rand offered its projections for 2022. It now anticipates year-over-year revenue growth of 11-13% (7-9% on an organic basis) for the year. Foreign currency translation is anticipated to hurt sales by 1% in 2022. Contribution from mergers/acquisitions is anticipated to be $225 million.

For the Industrial Technologies & Services segment, the company expects sales growth of 7-9%, while the same for the Precision & Science Technologies is anticipated to be 8-10%.

Adjusted EBITDA is anticipated to be $1.375-$1.415 billion for the year.

Zacks Rank & Stocks to Consider

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

Some better-ranked companies in the industry are discussed below.

Dover Corporation DOV presently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here. It delivered a four-quarter earnings surprise of 12.34%, on average.

Dover’s earnings estimates increased 2% for 2022 in the past 30 days. Its shares have lost 12.1% in the past three months.

Standex International Corporation SXI presently has a Zacks Rank #2. Its earnings surprise in the last four quarters was 5.85%, on average.

In the past 30 days, Standex’s earnings estimates have increased 5.9% for fiscal 2022 (ending June 2022). SXI’s shares have lost 7.6% in the past three months.

The Middleby Corporation MIDD presently carries a Zacks Rank #2. Its earnings surprise in the last four quarters was 1.50%, on average.

In the past 30 days, Middleby’s earnings estimates have increased 0.6% for 2022. MIDD’s shares have lost 7.5% in the past three months.


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