01—Abstract
Summary
Summary of the 10-Q filed August 2, 2024. Cited figures are marked; the original filing is the authoritative source.
Ingersoll Rand Inc. reported second-quarter 2024 revenues of $1,805.3 milliona, up from $1,686.5 million a year earlier, with net income of $186.5 million compared with $180.8 million and diluted earnings per share of $0.45 versus $0.44.
Growth was driven mainly by acquisitions of $117.0 millionb and higher pricing of $42.3 million, partially offset by lower organic volumes of $26.1 million. Operating income was roughly flat at $271.8 million versus $272.4 million, as a $58.8 million pre-tax loss on the sale of asbestos-related subsidiaries and higher acquisition-related expenses were recorded in other operating expense, net, which rose to $88.2 million. Adjusted EBITDA increased to $494.6 million from $424.7 million, and the company reported Adjusted EBITDA margin of 27.4% versus 25.2% in the prior-year quarter.
The balance sheet changed substantially during the period. On June 3, 2024, the company completed the acquisition of ILC Dover for initial cash consideration of $2,360.2 millionc, funded in part by $3,300.0 million of new senior notes issued May 10, 2024. Total debt rose to $4,755.4 million from $2,723.6 million at year-end 2023, while cash and cash equivalents fell to $1,062.5 million from $1,595.5 million.
Goodwill increased to $8,217.1 million and other intangible assets to $4,478.2 milliond. The company also entered a new $2,600.0 million unsecured revolving credit facility, of which none was drawn at June 30, 2024. Free cash flow for the six months was $382.4 million, compared with $351.5 million a year earlier, and the company repurchased treasury stock of $135.5 million in the period.
Management stated it was in compliance with all debt covenants at June 30, 2024. Investors will likely focus on the integration of ILC Dover, the higher debt load and its interest cost, and whether organic volume weakness persists.
02—Key points
Key Highlights
- Q2 2024 revenues rose to $1,805.3 million from $1,686.5 million, including $117.0 million from acquisitions and $42.3 million from higher pricing, partly offset by $26.1 million lower organic volumes.
- Operating income was $271.8 million versus $272.4 million, held back by $88.2 million of other operating expense, net, which included a $58.8 million loss on the asbestos sale.
- Net income attributable to Ingersoll Rand Inc. was $185.0 million, and diluted EPS was $0.45 versus $0.44 a year earlier.
- Adjusted EBITDA increased to $494.6 million from $424.7 million, with margin of 27.4% versus 25.2%.
- The ILC Dover acquisition closed June 3, 2024 for initial cash consideration of $2,360.2 million, and total long-term debt rose to $4,750.9 million from $2,693.0 million.
- Cash and cash equivalents declined to $1,062.5 million from $1,595.5 million at year-end 2023, while free cash flow for the six months was $382.4 million.
- Asbestos liabilities were divested to a third party (Onyx TopCo LLC, a subsidiary of Delticus Holdings LLC) effective June 10, 2024, with a net after-tax loss of $51.2 million recorded.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in Q2 FY2024, Ingersoll Rand kept $0.10.
- Revenue$1.81B100.0%
- Cost of revenue−$1.01B56.1%
- Gross profit$793.3M43.9%
- Operating costs−$521.5M28.9%
- Operating income$271.8M15.1%
- Interest, other & tax−$86.8M4.8%
- Net income$185.0M10.2%
04—Financials
Financial Highlights
Figures from 10-QQ2 FY2024filed August 2, 2024Financial Statements
Q2 FY2024 against Q2 FY2023
| Line item | Q2 FY2024Q2 FY2023 | Change |
|---|---|---|
| Revenue | $1.81B$1.69B | +7.0% |
| Cost of Revenue | $1.01B$989.00M | +2.3% |
| Gross Profit | $793.30M$697.50M | +13.7% |
| SG&A Expenses | $342.10M$315.60M | +8.4% |
| Operating Income | $271.80M$272.40M | −0.2% |
| Net Income | $185.00M$179.50M | +3.1% |
| EPS (Basic) | $0.46$0.44 | +4.5% |
| EPS (Diluted) | $0.45$0.44 | +2.3% |
| Shares Outstanding (Basic) | 403.50M404.50M | −0.2% |
| Shares Outstanding (Diluted) | 407.40M408.30M | −0.2% |
05—Questions
Frequently Asked Questions
Why did other operating expense rise sharply in the second quarter?
Other operating expense, net was $88.2 million compared with $19.8 million a year earlier. The increase was primarily due to a $58.8 million pre-tax loss on the sale of asbestos-related subsidiaries, along with higher acquisition and other transaction related expenses and non-cash charges of $13.1 million.
How did the company finance the ILC Dover acquisition?
On May 10, 2024, the company issued $3,300.0 million of senior unsecured notes. The net proceeds of the 2027, 2029 and 2031 Notes were used to partially fund the cash consideration for ILC Dover, with any remaining cash consideration funded with cash on hand. The company also entered a new $2,600.0 million senior unsecured revolving credit facility, under which no amounts were outstanding at June 30, 2024.
What drove the change in asbestos-related liabilities?
On June 5, 2024, the company agreed to transfer 100% of the equity of three wholly-owned subsidiaries holding asbestos liabilities and related insurance assets to Onyx TopCo LLC, a subsidiary of Delticus Holdings LLC, effective June 10, 2024. The company states it no longer has any obligation for pending and future asbestos claims, and the divested entities were deconsolidated. The transaction produced a pre-tax loss of $58.8 million and an after-tax loss of $51.2 million.
How did gross margin and pricing change in the quarter?
Gross profit was $793.3 million, or 43.9% of revenues, compared with $697.5 million, or 41.4%, a year earlier. The company attributed the increase primarily to higher pricing and acquisitions, and to increased price and input cost productivity improvements. Revenue growth from higher pricing was $42.3 million for the quarter.
06—Continue