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Ingersoll Rand (IR) Q4 Earnings & Revenues Surpass Estimates

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Ingersoll Rand Inc. (IR - Free Report) reported impressive results for fourth-quarter 2020, with earnings surpassing estimates by 15.2%. Also, sales in the quarters exceeded expectations by 2.5%.
 
It is worth mentioning here that the company came into existence when Gardner Denver Holdings, Inc. acquired the Industrial segment of Ingersoll-Rand plc in February 2020. It is a global industrial company, with expertise in mission-critical flow creation and industrial technologies. For comparison purpose, the company provided supplemental data, assuming the above-mentioned transaction was completed in January 2018.

Its adjusted earnings in the quarter under review were 53 cents per share, up 43.2% from the supplemental number of 37 cents in the year-ago quarter. The bottom line also surpassed the Zacks Consensus Estimate of 46 cents.

In 2020, the company’s earnings came in at $1.55 per share, down 1.9% year-over-year.

Revenue Details

Ingersoll Rand’s revenues of $1,510.7 million in the fourth quarter declined 4.9% from the year-ago quarter’s supplemental number. Organic sales in the quarter declined 7.4% year over year, while acquisition had a positive 0.4% impact. Also, movements in foreign currencies had a positive impact of 2.1%.

However, the company’s revenues surpassed the Zacks Consensus Estimate of $1,473 million.

In 2020, the company’s total supplemental revenues were $5.4 billion, down 12.9% year over year.

Orders in the fourth quarter totaled $1,530.1 million, increasing 4.7% from the year-ago quarter’s supplemental number.

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

Industrial Technologies & Services generated revenues of $1,012 million, contributing 67% to net revenues in the reported quarter. Sales fell 5.4% year over year on an 8.1% fall in organic sales. Movements in foreign currencies had a positive impact of 2.4% and acquisitions contributed 0.3%. The segment’s orders in the quarter increased 4.4%.

Precision & Science Technologies’ revenues totaled $206.5 million, contributing 13.7% to net revenues in the fourth quarter. On a year-over-year basis, the segment’s revenues declined 3.1%. Organic sales decline of 7.5% was partially offset by 3.2% gain from movements in foreign currencies and 1.2% gain from acquisitions. The segment’s orders were up 9.8%.

The Specialty Vehicle Technologies generated revenues of $246.1 million, contributing 16.3% to net revenues in the reported quarter. Sales increased 8.7% year over year on 8.3% hike in organic sales and 0.4% benefit from foreign currency movements. The segment’s orders in the quarter increased 21.1%.

High Pressure Solutions’ revenues totaled $46.1 million, contributing 3% to net revenues in the quarter under review. On a year-over-year basis, the segment’s revenues plunged 41.6% on a fall in organic sales of 41.4% and forex woes of 0.2%. The segment’s orders were down 50.9%.

Margin Profile

Adjusted earnings before interest, tax, depreciation and amortization (EBITDA) in the quarter was $344 million, flat year over year. Also, margins increased 110 basis points (bps) to 22.8%.

On a segmental basis, supplemental adjusted EBITDA margin increased 400 bps year over year to 26.1% for Industrial Technologies & Services, and jumped 290 bps to 30.8% for Precision & Science Technologies. Also, margin for Specialty Vehicle Technologies segment grew 420 bps to 18.7% but that of High Pressure Solutions’ were down 14.9 percentage points to 5.4%.

Balance Sheet & Cash Flow

Exiting 2020, Ingersoll Rand had cash and cash equivalents of $1,750.9 million, up 33.3% from $1,313.3 million recorded in the last reported quarter. Long-term debt increased 0.6% sequentially to $3,859.1 million.

The company’s liquidity of $2.7 billion at the end of 2020 comprised cash of $1.8 billion and credit facilities of $1 billion.

In 2020, it generated net cash of $914.3 million from operating activities, up 166.3% year over year. Capital expenditures totaled $48.7 million versus $43.2 million in the previous year.

In the fourth quarter, the company generated free cash flow of $397 million.

Outlook

The company anticipates realizing savings in 2021 as a result of synergy actions related to the combination of Ingersoll-Rand’s Industrial segment with Gardner Denver. These savings are part of $300-million savings expected from the transaction in the first three years of the completion.

The company anticipates to realize revenue growth of high-single to low-double digits in 2021. Also, it expects adjusted EBITDA of $1,230 to $1,260 million, indicating an increase of 14%-17% over the previous year.

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

 

Zacks Rank & Other Stocks to Consider

The company currently carries a Zacks Rank #2 (Buy).

Some other top-ranked stocks are iRobot Corporation (IRBT - Free Report) , Franklin Electric Co., Inc. (FELE - Free Report) and Emerson Electric Co. (EMR - Free Report) . While iRobot sports a Zacks Rank #1 (Strong Buy), Franklin Electric and Emerson carry a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

iRobot has a trailing four-quarter earnings surprise of 228.19%, on average.

Franklin Electric has a trailing four-quarter earnings surprise of 19.15%, on average.

Emerson has a trailing four-quarter earnings surprise of 21.53%, on average.

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