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Ingersoll Rand (IR) Closes Roots Deal, Boosts IT&S Offerings

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Ingersoll Rand (IR - Free Report) has completed its previously announced acquisition of Howden Roots LLC from Chart Industries, Inc. (GTLS - Free Report) . The all-cash transaction was valued at $300 million.

The acquisition expands Ingersoll Rand’s product portfolio with incremental low-pressure compression and vacuum technologies. As part of the acquisition deal, IR has obtained ownership of the Connersville, IN, manufacturing facility.

IR, flaunting a Zacks Rank #1 (Strong Buy), expects the buyout to generate adjusted EBITDA margins of more than 30% by the third year. Roots is part of the company’s Industrial Technologies and Services (IT&S) segment.

Chart Industries, carrying a Zacks Rank #3 (Hold), will use the proceeds from its sale of Roots to repay debts. The divestiture accelerates the company’s deleveraging plan and allows it to focus on core strategic solution offerings and integration efforts.

The divestiture advances Chart Industries’ goal of reaching net leverage ratio of 2.5-2.9 by mid-2024. The company also expects to achieve year-one annualized cost and commercial synergies of $175 million and $150 million, respectively.

Coming back to Ingersoll Rand, the company focuses on inorganic activities to expand market presence, solidify customer base and enhance product offerings. In January 2023, the company completed the acquisition of SPX FLOW’s Air Treatment business, boosting its core compressor product offering through a complementary product portfolio of energy-efficient compressed air dryers, filters and other consumables. The Air Treatment business is part of IR’s IT&S segment.

In October 2022, Ingersoll Rand acquired Dosatron International, expanding its digital technology portfolio and opening up opportunities in hydroponics, horticulture, animal health, food safety and sanitation, along with water treatment end markets. The September 2022 acquisition of Westwood Technical Limited expanded IR’s Industrial Internet of Things offerings. Successive acquisitions are driving the company’s top line. In second-quarter 2023, acquisitions contributed 5.9% to total revenues. For 2023, Ingersoll Rand anticipates mergers/acquisitions to contribute $300 million to total revenues.

Other Stocks to Consider

Apart from Ingersoll Rand, you could consider the following stocks from the Manufacturing - General Industrial industry:

Flowserve Corporation (FLS - Free Report) sports a Zacks Rank #1. The company pulled off a trailing four-quarter earnings surprise of 6.2%, on average. You can see the complete list of today’s Zacks #1 Rank stocks here.

Flowserve has an estimated earnings growth rate of 79.1% for the current year. The stock has rallied 23.1% in the year-to-date period.

RBC Bearings (RBC - Free Report) is also a #1 Ranked player. The company delivered a trailing four-quarter earnings surprise of 7.5%, on average.

RBC Bearings has an estimated earnings growth rate of 13.9% for the current year. The stock has gained 4.7% so far this year.

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