01—Abstract
Summary
Summary of the 10-Q filed May 3, 2024. Cited figures are marked; the original filing is the authoritative source.
Ingersoll Rand Inc. reported first-quarter 2024 revenues of $1,670.1 milliona, up from $1,629.3 million a year earlier, with the filing attributing the increase primarily to acquisitions of $55.7 million and higher pricing of $48.3 million, partially offset by lower organic volumes of $60.9 million.
Gross profit rose to $746.3 millionb from $664.2 million, and gross margin expanded to 44.7% from 40.8%. Operating income increased to $293.2 million from $240.3 million, and net income attributable to Ingersoll Rand Inc. was $202.2 million, or $0.50 per diluted share, compared with $161.1 million, or $0.39, in the prior-year quarter. Adjusted EBITDA rose to $458.5 million from $400.1 million, and the Adjusted EBITDA margin was 27.5% versus 24.6%.
Cash flow was weaker. Operating cash flow was $161.6 millionc versus $170.3 million, and free cash flow fell to $99.3 million from $147.9 million, reflecting higher capital expenditures of $62.3 million versus $22.4 million. Cash and cash equivalents ended the quarter at $1,452.3 million, and total debt was $2,718.3 million.
The company repurchased $72.9 milliond of treasury stock during the quarter. Management stated it believes operating cash flow and revolver availability of $2,000.0 million will be sufficient for the foreseeable future.
The most significant pending event is the March 25, 2024 agreement to acquire ILC Dover from New Mountain Capital, LLC for an upfront all-cash price of approximately $2.325 billion plus contingent consideration of up to $75.0 million, expected to close in the second quarter of 2024. In a subsequent event, the board authorized a $1.0 billion increase to the share repurchase program on April 25, 2024, incremental to the $750 million authorization remaining.
02—Key points
Key Highlights
- Revenues of $1,670.1 million rose 2.5% year over year, driven by acquisitions of $55.7 million and higher pricing of $48.3 million, offset by lower organic volumes of $60.9 million.
- Gross profit increased 12.4% to $746.3 million, with gross margin improving to 44.7% from 40.8%.
- Net income attributable to Ingersoll Rand Inc. was $202.2 million, or $0.50 per diluted share, versus $161.1 million, or $0.39, a year earlier.
- Adjusted EBITDA increased to $458.5 million from $400.1 million, with the margin rising to 27.5% from 24.6%.
- Free cash flow declined to $99.3 million from $147.9 million, as operating cash flow of $161.6 million was lower and capital expenditures rose to $62.3 million from $22.4 million.
- Agreement to acquire ILC Dover for approximately $2.325 billion upfront in cash plus up to $75.0 million contingent consideration, expected to close in the second quarter of 2024 and be reported in the Precision and Science Technologies segment.
- Board authorized a $1.0 billion increase to the share repurchase program on April 25, 2024, in addition to the remaining amount under the existing $750 million authorization; the company had $2,000.0 million of unused revolver availability at quarter end.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in Q1 FY2024, Ingersoll Rand kept $0.12.
- Revenue$1.67B100.0%
- Cost of revenue−$923.8M55.3%
- Gross profit$746.3M44.7%
- Operating costs−$453.1M27.1%
- Operating income$293.2M17.6%
- Interest, other & tax−$91.0M5.4%
- Net income$202.2M12.1%
04—Financials
Financial Highlights
Figures from 10-QQ1 FY2024filed May 3, 2024Financial Statements
Q1 FY2024 against Q1 FY2023
| Line item | Q1 FY2024Q1 FY2023 | Change |
|---|---|---|
| Revenue | $1.67B$1.63B | +2.5% |
| Cost of Revenue | $923.80M$965.10M | −4.3% |
| Gross Profit | $746.30M$664.20M | +12.4% |
| SG&A Expenses | $336.30M$311.10M | +8.1% |
| Operating Income | $293.20M$240.30M | +22.0% |
| Interest Expense | $36.80M$38.90M | −5.4% |
| Net Income | $202.20M$161.10M | +25.5% |
| EPS (Basic) | $0.50$0.40 | +25.0% |
| EPS (Diluted) | $0.50$0.39 | +28.2% |
| Shares Outstanding (Basic) | 403.50M405.00M | −0.4% |
| Shares Outstanding (Diluted) | 407.90M409.20M | −0.3% |
05—Questions
Frequently Asked Questions
How did Ingersoll Rand's profitability change in the first quarter of 2024?
Operating income rose to $293.2 million from $240.3 million, and net income attributable to Ingersoll Rand Inc. increased to $202.2 million from $161.1 million. Diluted earnings per share were $0.50 versus $0.39. The filing attributes the gains mainly to higher pricing and gross margin improvement from price and input cost productivity, partly offset by higher selling and administrative expenses.
What is the significance of the pending ILC Dover acquisition?
Ingersoll Rand agreed on March 25, 2024 to acquire ILC Dover from New Mountain Capital, LLC for an upfront all-cash price of approximately $2.325 billion plus up to $75.0 million in contingent consideration. ILC Dover serves biopharmaceutical, pharmaceutical, medical device and space markets and will be reported in the Precision and Science Technologies segment. The transaction is expected to close in the second quarter of 2024, subject to regulatory approvals and closing conditions.
Why did free cash flow decline despite higher earnings?
Free cash flow fell to $99.3 million from $147.9 million. Operating cash flow decreased $8.7 million to $161.6 million, mainly due to a larger increase in operating working capital and higher tax payments, and capital expenditures increased to $62.3 million from $22.4 million. Operating working capital rose $166.5 million to $1,427.5 million, primarily from lower accounts payable and higher inventories and receivables.
How did the segments perform in the quarter?
Industrial Technologies and Services revenue rose 4.3% to $1,373.4 million, with Segment Adjusted EBITDA up 19.0% to $411.1 million and margin of 29.9%. Precision and Science Technologies revenue fell 4.9% to $296.7 million, with Segment Adjusted EBITDA down 3.3% to $91.4 million, though its margin rose to 30.8% from 30.3%. Segment orders declined in both segments, by 3.6% and 5.4% respectively.
What capital return and liquidity actions did the company take?
The company repurchased $72.9 million of its stock and paid $8.1 million in dividends in the quarter. After quarter end, the board authorized a $1.0 billion increase to the repurchase program. Cash and cash equivalents were $1,452.3 million at March 31, 2024, total debt was $2,718.3 million, and the company had $2,000.0 million of unused availability under its Revolving Credit Facility. Management stated it was in compliance with all debt covenants.
06—Continue