Ingersoll Rand Inc
For the period ended Jun 30, 2024. Filed Aug 2, 2024.
View on SEC.govAbout this filing
A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Jun 30, 2024 · Filed Aug 2, 2024
IR$82.99+1.4%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2024-03-31; filed 2024-05-03.
0001628280-24-020267
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2024-06-30; filed 2024-08-02.
0001628280-24-034400
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 108 previous paragraphs and 126 current paragraphs.
70 unchanged; 30 reworded; 21 added; 8 removed; 0 previous and 5 current paragraphs rearranged.
Tables are not compared: 9 previous and 11 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (21)
Current report
Revenues for the six month period ended June 30, 2024 were $3,475.4 million, an increase of $159.6 million, or 4.8%, compared to $3,315.8 million for the same six month period in 2023. The increase in revenues was primarily due to acquisitions of $172.7 million and higher pricing of $90.6 million, partially offset by lower organic volumes of $87.0 million and the unfavorable impact of foreign currencies of $16.7 million. The percentage of consolidated revenues derived from aftermarket parts and services was 36.3% in the six month period ended June 30, 2024 compared to 36.0% in the same six month period in 2023.
Current report
Selling and administrative expenses were $678.4 million for the six month period ended June 30, 2024, an increase of $51.7 million, or 8.2%, compared to $626.7 million for the same six month period in 2023. The increase in selling and administrative expenses was mainly from businesses acquired in the second half of 2023 and first half of 2024. Selling and administrative expenses as a percentage of revenues increased to 19.5% for the six month period ended June 30, 2024 from 18.9% in the same six month period in 2023.
Current report
Amortization of intangible assets was $182.8 million for the six month period ended June 30, 2024, an increase of $0.7 million, compared to $182.1 million in the same six month period in 2023. The increase was primarily due to businesses acquired in the second half of 2023 and first half of 2024 discussed in Note 2 “Acquisitions” to our unaudited condensed consolidated financial statements included elsewhere in this Form 10-Q, partially offset by certain intangible assets becoming fully amortized during the period.
Current report
Other operating expense, net was $88.2 million for the three month period ended June 30, 2024, an increase of $68.4 million, compared to $19.8 million in the same three month period in 2023. The increase in expense was primarily due to the loss on asbestos sale of $58.8 million, higher acquisition and other transaction related expenses and non-cash charges of $13.1 million and lower foreign currency transaction gains, net of $1.1 million, partially offset by lower restructuring charges of $1.3 million. See Note 18 “Contingencies” to our unaudited condensed consolidated financial statements included elsewhere in this Form 10-Q for further discussion of the loss on asbestos sale.
Current report
18 “Contingencies” to our unaudited condensed consolidated financial statements included elsewhere in this Form 10-Q for further discussion of the loss on asbestos sale.
Current report
Net income was $391.0 million for the six month period ended June 30, 2024 compared to net income of $344.0 million in the same six month period in 2023. The increase in net income was primarily due to higher gross profit on increased revenues and lower provision for income taxes, partially offset by higher other operating expense, net, higher selling and administrative expenses, and higher loss on equity method investments.
Current report
Adjusted EBITDA increased $128.3 million to $953.1 million for the six month period ended June 30, 2024 compared to $824.8 million in the same six month period in 2023. Adjusted EBITDA as a percentage of revenues increased 250 basis points to 27.4% for the six month period ended June 30, 2024 from 24.9% for the same six month period in 2023. The increase in Adjusted EBITDA was primarily due to higher pricing of $90.6 million, and favorable cost productivity and product mix of $55.2 million, partially offset by lower organic sales volume of $37.4 million, higher selling and administrative costs of $18.0 million, and the unfavorable impact of foreign currencies of $5.0 million. The increase in Adjusted EBITDA as a percentage of revenues is primarily attributable to higher pricing, input cost productivity improvements, and product mix.
Current report
Adjusted Net Income increased $115.8 million to $661.0 million for the six month period ended June 30, 2024 compared to $545.2 million in the same six month period in 2023. The increase was primarily due to increased Adjusted EBITDA and higher interest income on cash and cash equivalents, partially offset by a higher income tax provision, as adjusted, and higher interest expense.
Current report
Segment Orders for the three month period ended June 30, 2024 were $1,465.4 million, an increase of $21.1 million, or 1.5%, compared to $1,444.3 million in the same three month period in 2023. The increase in Segment Orders was due to acquisitions of
Current report
$73.2 million or 5.1%, partially offset by lower organic orders of $38.1 million or 2.6% and the unfavorable impact of foreign currencies of $14.0 million or 1.0%.
Current report
Segment Revenues for the three month period ended June 30, 2024 were $1,466.5 million, an increase of $88.1 million, or 6.4%, compared to $1,378.4 million in the same three month period in 2023. The increase in Segment Revenues was due to acquisitions of $81.1 million or 5.9% and higher pricing of $35.3 million or 2.6%, partially offset by lower organic volumes of $15.7 million or 1.1% and unfavorable impact of foreign currencies of $12.6 million or 0.9%. The percentage of Segment Revenues derived from aftermarket parts and service was 38.8% in the three month period ended June 30, 2024 compared to 38.8% in the same three month period in 2023.
Current report
Segment Adjusted EBITDA for the three month period ended June 30, 2024 was $436.2 million, an increase of $58.7 million, or 15.5%, from $377.5 million in the same three month period in 2023. Segment Adjusted EBITDA Margin increased 230 basis points to 29.7% from 27.4% in 2023. The increase in Segment Adjusted EBITDA was primarily due to higher pricing of $35.3 million or 9.4%, favorable cost productivity and product mix of $23.3 million or 6.2%, and acquisitions of $18.7 million or 5.0%, partially offset by higher selling and administrative costs of $9.1 million or 2.4%, lower organic sales volume of $6.4 million or 1.7%, and unfavorable impact of foreign currencies of $3.6 million or 1.0%.
Current report
Segment Orders for the six month period ended June 30, 2024 were $2,863.8 million, a decrease of $30.8 million, or 1.1%, compared to $2,894.6 million in the same six month period in 2023. The decrease in Segment Orders was due to lower organic orders of $143.0 million or 4.9% and the unfavorable impact of foreign currencies of $16.6 million or 0.6%, partially offset by acquisitions of $128.8 million or 4.4%.
Current report
Segment Revenues for the six month period ended June 30, 2024 were $2,839.9 million, an increase of $144.3 million, or 5.4%, compared to $2,695.6 million in the same six month period in 2023. The increase in Segment Revenues was due to acquisitions of $136.8 million or 5.1% and higher pricing of $74.5 million or 2.8%, partially offset by lower organic volumes of $52.0 million or 1.9% and unfavorable impact of foreign currencies of $15.0 million or 0.6%. The percentage of Segment Revenues derived from aftermarket parts and service was 39.3% in the six month period ended June 30, 2024 compared to 39.4% in the same six month period in 2023.
Current report
Segment Adjusted EBITDA for the six month period ended June 30, 2024 was $847.3 million, an increase of $124.2 million, or 17.2%, from $723.1 million in the same six month period in 2023. Segment Adjusted EBITDA Margin increased 300 basis points to 29.8% from 26.8% in 2023. The increase in Segment Adjusted EBITDA was primarily due to higher pricing of $74.5 million or 10.3%, favorable cost productivity and product mix of $59.6 million or 8.2%, and acquisitions of $30.4 million or 4.2%, partially offset by lower organic sales volume of $21.0 million or 2.9%, higher selling and administrative costs of $15.8 million or 2.2%, and unfavorable impact of foreign currencies of $4.4 million or 0.6%.
Current report
Segment Orders for the three month period ended June 30, 2024 were $334.0 million, an increase of $40.9 million, or 14.0%, compared to $293.1 million in the same three month period in 2023. The increase in Segment Orders was due to acquisitions of $26.0 million or 8.9% and organic growth of $17.0 million or 5.8%, partially offset by foreign currencies of $2.1 million or 0.7%.
Current report
Segment Revenues for the three month period ended June 30, 2024 were $338.8 million, an increase of $30.7 million, or 10.0%, compared to $308.1 million in the same three month period in 2023. The increase in Segment Revenues was primarily due to acquisitions of $35.9 million or 11.7% and higher pricing of $7.0 million or 2.3%, partially offset by lower organic volumes of $10.4 million or 3.4% and unfavorable impact of foreign currencies of $1.8 million or 0.6%. The percentage of Segment Revenues derived from aftermarket parts and service was 21.7% in the three month period ended June 30, 2024 compared to 20.6% in the same three month period in 2023.
Current report
Segment Adjusted EBITDA for the three month period ended June 30, 2024 was $102.5 million, an increase of $12.5 million, or 13.9%, from $90.0 million in the same three month period in 2023. Segment Adjusted EBITDA Margin increased 110 basis points to 30.3% from 29.2% in 2023. The increase in Segment Adjusted EBITDA was primarily due to acquisitions of $9.7 million or 10.8%, higher pricing of $7.0 million or 7.8%, and lower selling and administrative costs of $1.2 million or 1.3%, partially offset by lower organic sales volume of $4.8 million or 5.3% and unfavorable impact of foreign currencies of $0.5 million or 0.6%.
Current report
Segment Orders for the six month period ended June 30, 2024 were $643.0 million, an increase of $23.4 million, or 3.8%, compared to $619.6 million in the same six month period in 2023. The increase in Segment Orders was due to acquisitions of $26.0 million or 4.2%, partially offset by the unfavorable impact of foreign currencies of $2.0 million or 0.3% and lower organic orders of $0.6 million or 0.1%.
Current report
Segment Revenues for the six month period ended June 30, 2024 were $635.5 million, an increase of $15.3 million, or 2.5%, compared to $620.2 million in the same six month period in 2023. The increase in Segment Revenues was due to acquisitions of $35.9 million or 5.8% and higher pricing of $16.1 million or 2.6%, partially offset by lower organic volumes of $35.0 million or 5.6% and unfavorable impact of foreign currencies of $1.7 million or 0.3%. The percentage of Segment Revenues derived from aftermarket parts and service was 22.9% in the six month period ended June 30, 2024 compared to 21.0% in the same six month period in 2023.
Current report
Segment Adjusted EBITDA for the six month period ended June 30, 2024 was $193.9 million, an increase of $9.4 million, or 5.1%, from $184.5 million in the same six month period in 2023. Segment Adjusted EBITDA Margin increased 80 basis points to 30.5% from 29.7% in 2023. The increase in Segment Adjusted EBITDA was primarily due to higher pricing of $16.1 million or 8.7%, acquisitions of $9.5 million or 5.1%, lower selling and administrative costs of $0.8 million or 0.4%, and favorable cost productivity and product mix of $0.2 million or 0.1%, partially offset by lower organic sales volume of $16.4 million or 8.9% and unfavorable impact of foreign currencies of $0.8 million or 0.4%.
Removed paragraphs (8)
Previous report
Recent Development
Previous report
On March 25, 2024, the Company entered into an agreement to acquire ILC Dover from New Mountain Capital, LLC for an upfront all-cash purchase price of approximately $2.325 billion and contingent consideration of up to $75.0 million. ILC Dover’s offerings include solutions for biopharmaceutical, pharmaceutical, and medical device markets as well as products for the space industry and will be reported in the Precision and Science Technologies segment. This transaction is expected to close in the second quarter of 2024, subject to customary regulatory approvals and closing conditions.
Previous report
Segment Orders for the three month period ended March 31, 2024 were $1,398.4 million, a decrease of $51.9 million, or 3.6%, compared to $1,450.3 million in the same three month period in 2023. The decrease in Segment Orders was due to lower organic orders of $104.9 million or 7.2% and the unfavorable impact of foreign currencies of $2.6 million or 0.2%, partially offset by acquisitions of $55.6 million or 3.8%.
Previous report
Segment Revenues for the three month period ended March 31, 2024 were $1,373.4 million, an increase of $56.2 million, or 4.3%, compared to $1,317.2 million in the same three month period in 2023. The increase in Segment Revenues was due to acquisitions of $55.7 million or 4.2% and higher pricing of $39.2 million or 3.0%, partially offset by lower organic volumes of $36.3 million or 2.8% and unfavorable impact of foreign currencies of $2.4 million or 0.2%. The percentage of Segment Revenues derived from aftermarket parts and service was 39.8% in the three month period ended March 31, 2024 compared to 40.0% in the same three month period in 2023.
Previous report
Segment Adjusted EBITDA for the three month period ended March 31, 2024 was $411.1 million, an increase of $65.5 million, or 19.0%, from $345.6 million in the same three month period in 2023. Segment Adjusted EBITDA Margin increased 370 basis points to 29.9% from 26.2% in 2023. The increase in Segment Adjusted EBITDA was primarily due to higher pricing of $39.2 million or 11.3%, favorable cost productivity and product mix of $36.3 million or 10.5%, and acquisitions of $11.7 million or 3.4%, partially offset by lower organic sales volume of $14.6 million or 4.2%, higher selling and administrative costs of $6.7 million or 1.9%, and unfavorable impact of foreign currencies of $0.8 million or 0.2%.
Previous report
Segment Orders for the three month period ended March 31, 2024 were $309.0 million, a decrease of $17.5 million, or 5.4%, compared to $326.5 million in the same three month period in 2023. The decrease in Segment Orders was due to lower organic orders of $17.6 million or 5.4%, partially offset by foreign currencies of $0.1 million or 0.0%.
Previous report
Segment Revenues for the three month period ended March 31, 2024 were $296.7 million, a decrease of $15.4 million, or 4.9%, compared to $312.1 million in the same three month period in 2023. The decrease in Segment Revenues was primarily due to lower organic volumes of $24.6 million or 7.9%, partially offset by higher pricing of $9.1 million or 2.9% and favorable impact of foreign currencies of $0.1 million or 0.0%. The percentage of Segment Revenues derived from aftermarket parts and service was 24.2% in the three month period ended March 31, 2024 compared to 21.4% in the same three month period in 2023.
Previous report
Segment Adjusted EBITDA for the three month period ended March 31, 2024 was $91.4 million, a decrease of $3.1 million, or 3.3%, from $94.5 million in the same three month period in 2023. Segment Adjusted EBITDA Margin increased 50 basis points to 30.8% from 30.3% in 2023. The decrease in Segment Adjusted EBITDA was primarily due to lower organic sales volume of $11.6 million or 12.3%, higher selling and administrative costs of $0.4 million or 0.4%, and unfavorable impact of foreign currencies of $0.3 million or 0.3%, partially offset by higher pricing of $9.1 million or 9.6% and product mix of $0.2 million or 0.2%.
Reworded paragraphs (30)
Previous wording
Ingersoll Rand is a global market leader with a broad range of innovative and mission-critical air, fluid, energy and medical technologies, providing services and solutions to increase industrial productivity and efficiency. We manufacture one of the broadest and most complete ranges of compressor, pump, vacuum and blower products in our markets, which, when combined with our global geographic footprint and application expertise, allows us to provide differentiated product and service offerings to our customers. Our products are sold under a collection of premier, market-leading brands, including Ingersoll Rand, Gardner Denver, Nash, CompAir, Thomas, Milton Roy, Seepex, Elmo Rietschle, ARO, Robuschi, Emco Wheaton and Runtech Systems, which we believe are globally recognized in their respective end-markets and known for product quality, reliability, efficiency and superior customer service.
Current wording
Ingersoll Rand is a global market leader with a broad range of innovative and mission-critical air, fluid, energy and medical technologies, providing services and solutions to increase industrial productivity and efficiency. We manufacture one of the broadest and most complete ranges of compressor, pump, vacuum and blower products in our markets, which, when combined with our global geographic footprint and application expertise, allows us to provide differentiated product and service offerings to our customers. Our products are sold under a collection of premier, market-leading brands, including Ingersoll Rand, Gardner Denver, Nash, CompAir, ILC Dover, Thomas, Milton Roy, Seepex, Elmo Rietschle, ARO, Robuschi, Emco Wheaton and Runtech Systems, which we believe are globally recognized in their respective end-markets and known for product quality, reliability, efficiency and superior customer service.
Previous wording
A significant portion of our revenues, approximately 53% for the three month period ended March 31, 2024, was denominated in currencies other than the U.S. dollar. Because much of our manufacturing facilities and labor force costs are outside of the United States, a significant portion of our costs are also denominated in currencies other than the U.S. dollar. Changes in foreign exchange rates can therefore impact our results of operations and are quantified when significant to our discussion.
Current wording
A significant portion of our revenues, approximately 53% for the six month period ended June 30, 2024, was denominated in currencies other than the U.S. dollar. Because much of our manufacturing facilities and labor force costs are outside of the United States, a significant portion of our costs are also denominated in currencies other than the U.S. dollar. Changes in foreign exchange rates can therefore impact our results of operations and are quantified when significant to our discussion.
Previous wording
Consolidated results should be read in conjunction with the segment results section herein and Note 19 “Segment Results” to our unaudited condensed consolidated financial statements included elsewhere in this Form 10-Q, which provides more detailed discussions concerning certain components of our Condensed Consolidated Statements of Operations. All intercompany accounts and transactions have been eliminated within the consolidated results. The following table presents selected Condensed Consolidated Results of Operations of our business for the three month periods ended March 31, 2024 and 2023.
Current wording
Consolidated results should be read in conjunction with the segment results section herein and Note 19 “Segment Results” to our unaudited condensed consolidated financial statements included elsewhere in this Form 10-Q, which provides more detailed discussions concerning certain components of our Condensed Consolidated Statements of Operations. All intercompany accounts and transactions have been eliminated within the consolidated results. The following table presents selected Condensed Consolidated Results of Operations of our business for the three and six month periods ended June 30, 2024 and 2023.
Previous wording
Revenues for the three month period ended March 31, 2024 were $1,670.1 million, an increase of $40.8 million, or 2.5%, compared to $1,629.3 million for the same three month period in 2023. The increase in revenues was primarily due to acquisitions of $55.7 million and higher pricing of $48.3 million, partially offset by lower organic volumes of $60.9 million and unfavorable impact of foreign currencies of $2.3 million. The percentage of consolidated revenues derived from aftermarket parts and services was 37.0% in the three month period ended March 31, 2024 compared to 36.5% in the same three month period in 2023.
Current wording
Revenues for the three month period ended June 30, 2024 were $1,805.3 million, an increase of $118.8 million, or 7.0%, compared to $1,686.5 million for the same three month period in 2023. The increase in revenues was primarily due to acquisitions of $117.0 million and higher pricing of $42.3 million, partially offset by lower organic volumes of $26.1 million and unfavorable impact of foreign currencies of $14.4 million. The percentage of consolidated revenues derived from aftermarket parts and services was 35.6% in the three month period ended June 30, 2024 compared to 35.5% in the same three month period in 2023.
Previous wording
Gross profit for the three month period ended March 31, 2024 was $746.3 million, an increase of $82.1 million, or 12.4%, compared to $664.2 million for the same three month period in 2023, and as a percentage of revenues was 44.7% for the three month period ended March 31, 2024 and 40.8% for the same three month period in 2023. The increase in gross profit is primarily due to higher pricing and acquisitions discussed above. The increase in gross profit as a percentage of revenues is primarily due to increased price and input cost productivity improvements.
Current wording
Gross profit for the three month period ended June 30, 2024 was $793.3 million, an increase of $95.8 million, or 13.7%, compared to $697.5 million for the same three month period in 2023, and as a percentage of revenues was 43.9% for the three month period ended June 30, 2024 and 41.4% for the same three month period in 2023. The increase in gross profit is primarily due to higher pricing and acquisitions discussed above. The increase in gross profit as a percentage of revenues is primarily due to increased price and input cost productivity improvements.
Previous wording
Selling and administrative expenses were $336.3 million for the three month period ended March 31, 2024, an increase of $25.2 million, or 8.1%, compared to $311.1 million for the same three month period in 2023. The increase in selling and administrative expenses was primarily attributable to businesses acquired in 2023 and first quarter of 2024. Selling and administrative expenses as a percentage of revenues increased to 20.1% for the three month period ended March 31, 2024 from 19.1% in the same three month period in 2023.
Current wording
Selling and administrative expenses were $342.1 million for the three month period ended June 30, 2024, an increase of $26.5 million, or 8.4%, compared to $315.6 million for the same three month period in 2023. The increase in selling and administrative expenses was primarily attributable to businesses acquired in the second half of 2023 and first half of 2024. Selling and administrative expenses as a percentage of revenues increased to 18.9% for the three month period ended June 30, 2024 from 18.7% in the same three month period in 2023.
Previous wording
Amortization of intangible assets was $91.6 million for the three month period ended March 31, 2024, a decrease of $0.8 million, compared to $92.4 million in the same three month period in 2023. The decrease was primarily due to certain intangible assets becoming fully amortized during the period, partially offset by businesses acquired in 2023 and first quarter of 2024 discussed in Note 2 “Acquisitions” to our unaudited condensed consolidated financial statements included elsewhere in this Form 10-Q.
Current wording
Amortization of intangible assets was $91.2 million for the three month period ended June 30, 2024, an increase of $1.5 million, compared to $89.7 million in the same three month period in 2023. The increase was primarily due to businesses acquired in the second half of 2023 and first half of 2024 discussed in Note 2 “Acquisitions” to our unaudited condensed consolidated financial statements included elsewhere in this Form 10-Q, partially offset by certain intangible assets becoming fully amortized during the period.
Previous wording
Other operating expense, net was $25.2 million for the three month period ended March 31, 2024, an increase of $4.8 million, compared to $20.4 million in the same three month period in 2023. The increase in expense was primarily due to higher restructuring charges of $6.8 million and higher acquisition and other transaction related expenses and non-cash charges of $0.1 million, partially offset by higher foreign currency transaction gains, net of $1.7 million.
Current wording
Other operating expense, net was $113.4 million for the six month period ended June 30, 2024, an increase of $73.2 million, compared to $40.2 million in the same six month period in 2023. The increase was primarily due to the loss on asbestos sale of $58.8 million, higher acquisition and other transaction related expenses and non-cash charges of $13.2 million and higher restructuring charges of $5.5 million, partially offset by higher foreign currency transaction gains, net of $0.6 million. See Note
Previous wording
Interest expense was $36.8 million for the three month period ended March 31, 2024, a decrease of $2.1 million, compared to $38.9 million in the same three month period in 2023. The decrease was primarily due to the interest rate derivative contracts discussed in Note 13 “Hedging Activities and Derivative Instruments” to our unaudited condensed consolidated financial statements included elsewhere in this Form 10-Q. The weighted average interest rate, including the impact of the interest rate derivative contracts, was approximately 5.3% for the three month period ended March 31, 2024 and 5.2% in the same three month period in 2023.
Current wording
Interest expense was $50.8 million for the three month period ended June 30, 2024, an increase of $10.0 million, compared to $40.8 million in the same three month period in 2023. The increase was primarily due to an increase in long term debt, partially offset by the interest rate derivative contracts discussed in Note 13 “Hedging Activities and Derivative Instruments” to our unaudited condensed consolidated financial statements included elsewhere in this Form 10-Q. The weighted average interest rate, including the impact of the interest rate derivative contracts, was approximately 5.2% for the three month period ended June 30, 2024 and 5.4% in the same three month period in 2023.
Previous wording
Other income, net was $13.2 million and $9.6 million in the three month periods ended March 31, 2024 and 2023, respectively. The increase was primarily due to an increase in interest income from holdings of cash and cash equivalents.
Current wording
Other income, net was $18.1 million and $8.2 million in the three month periods ended June 30, 2024 and 2023, respectively. The increase was primarily due to an increase in interest income from holdings of cash and cash equivalents.
Previous wording
The provision for income taxes was $54.4 million, resulting in a 20.2% effective income tax provision rate for the three month period ended March 31, 2024, compared to a provision for income taxes of $48.1 million, resulting in a 22.8% effective income tax provision rate in the same three month period in 2023. The increase in the tax provision for the three month period ended March 31, 2024 is primarily due to an increase in the pretax book income. The decrease in the effective income tax provision rate is primarily due to the additional benefit of a windfall tax deduction during the first quarter of 2024, partially offset by an increase in the pretax book income in jurisdictions with higher effective tax rates.
Current wording
The provision for income taxes was $46.1 million, resulting in a 19.5% effective income tax provision rate for the three month period ended June 30, 2024, compared to a provision for income taxes of $60.5 million, resulting in a 25.3% effective income tax provision rate in the same three month period in 2023. The decrease in the tax provision for the three month period ended June 30, 2024 is primarily due to a decrease in the pretax book income in jurisdictions with higher effective tax rates combined with an increase in earnings in jurisdictions with lower rates and a benefit from a windfall tax deduction.
Previous wording
Net income was $204.5 million for the three month period ended March 31, 2024 compared to net income of $163.2 million in the same three month period in 2023. The increase in net income was primarily due to higher gross profit on increased revenues, partially offset by higher selling and administrative expenses, higher loss on equity method investments, and higher provision for income taxes.
Current wording
Net income was $186.5 million for the three month period ended June 30, 2024 compared to net income of $180.8 million in the same three month period in 2023. The increase in net income was primarily due to higher gross profit on increased revenues and lower provision for income taxes, partially offset by higher other operating expense, net, higher selling and administrative expenses, and higher loss on equity method investments.
Previous wording
Adjusted EBITDA increased $58.4 million to $458.5 million for the three month period ended March 31, 2024 compared to $400.1 million in the same three month period in 2023. Adjusted EBITDA as a percentage of revenues increased 290 basis points to 27.5% for the three month period ended March 31, 2024 from 24.6% for the same three month period in 2023. The increase in Adjusted EBITDA was primarily due to higher pricing of $48.3 million, favorable cost productivity and product mix of $32.9 million, and acquisitions of $11.5 million, partially offset by lower organic sales volume of $26.2 million, higher selling and administrative costs of $9.6 million, and unfavorable impact of foreign currencies of $1.2 million. The increase in Adjusted EBITDA as a percentage of revenues is primarily attributable to higher pricing, input cost productivity improvements, and product mix.
Current wording
Adjusted EBITDA increased $69.9 million to $494.6 million for the three month period ended June 30, 2024 compared to $424.7 million in the same three month period in 2023. Adjusted EBITDA as a percentage of revenues increased 220 basis points to 27.4% for the three month period ended June 30, 2024 from 25.2% for the same three month period in 2023. The increase in Adjusted EBITDA was primarily due to higher pricing of $42.3 million, acquisitions of $28.4 million, and favorable cost productivity and product mix of $22.3 million, partially offset by lower organic sales volume of $11.2 million, higher selling and administrative costs of $8.4 million, and unfavorable impact of foreign currencies of $3.8 million. The increase in Adjusted EBITDA as a percentage of revenues is primarily attributable to higher pricing, input cost productivity improvements, and product mix.
Previous wording
Adjusted Net Income increased $52.9 million to $319.9 million for the three month period ended March 31, 2024 compared to $267.0 million in the same three month period in 2023. The increase was primarily due to higher Adjusted EBITDA, partially offset by a higher income tax provision, as adjusted.
Current wording
Adjusted Net Income increased $62.9 million to $341.1 million for the three month period ended June 30, 2024 compared to $278.2 million in the same three month period in 2023. The increase was primarily due to higher Adjusted EBITDA and higher interest income on cash and cash equivalents, partially offset by higher interest expense and higher income tax provision, as adjusted.
Previous wording
(a)Depreciation expense excludes $0.9 million and $0.9 million of depreciation of rental equipment for the three month periods ended March 31, 2024 and 2023, respectively.
Current wording
(a)Depreciation expense excludes $1.1 million and $0.8 million of depreciation of rental equipment for the three month periods ended June 30, 2024 and 2023, respectively, and excludes $2.0 million and $1.7 million for the six month periods ended June 30, 2024 and 2023, respectively.
Previous wording
(b)Represents $89.5 million and $89.8 million of amortization of intangible assets arising from acquisitions (customer relationships, technology, tradenames and backlog) and $2.1 million and $2.6 million of amortization of non-acquisition related intangible assets, in each case, for the three month periods ended March 31, 2024 and 2023, respectively.
Current wording
(b)Represents $89.1 million and $87.1 million of amortization of intangible assets arising from acquisitions (customer relationships, technology, tradenames and backlog) and $2.1 million and $2.6 million of amortization of non-acquisition related intangible assets, in each case, for the three month periods ended June 30, 2024 and 2023, respectively.
Previous wording
Segment Results for the Three Month Periods Ended March 31, 2024 and 2023
Current wording
Segment Results for the Three and Six Month Periods Ended June 30, 2024 and 2023
Previous wording
Our investment resources include cash on hand, cash generated from operations and borrowings under our Revolving Credit Facility. We also have the ability to seek additional secured and unsecured borrowings, subject to Credit Agreement restrictions.
Current wording
Our investment resources include cash on hand, cash generated from operations and borrowings under our New Revolving Credit Facility. We also have the ability to seek additional secured and unsecured borrowings, subject to credit agreement restrictions.
Previous wording
As of March 31, 2024, we had $2,000.0 million of unused availability under the Revolving Credit Facility.
Current wording
As of June 30, 2024, we had $2,600.0 million of unused availability under the New Revolving Credit Facility.
Previous wording
We can increase the borrowing availability under the Senior Secured Credit Facilities by up to $1,600.0 million in the form of additional commitments under the Revolving Credit Facility and/or incremental term loans plus an additional amount so long as we do not exceed a specified senior secured leverage ratio. We can incur additional secured indebtedness under the term loan facilities if certain specified conditions are met under the Credit Agreement. Our liquidity requirements are significant primarily due to debt service requirements. See Note 11 “Debt” to the consolidated financial statements in our 2023 Annual Report and Note 10 “Debt” to our unaudited condensed consolidated financial statements included elsewhere in this Form 10-Q for further details.
Current wording
We can increase the borrowing availability under the New Revolving Credit Facility by up to $1,000.0 million in the form of additional commitments so long as we do not exceed a specified leverage ratio. Our liquidity requirements are significant primarily due to debt service requirements. See Note 11 “Debt” to the consolidated financial statements in our 2023 Annual Report and Note 10 “Debt” to our unaudited condensed consolidated financial statements included elsewhere in this Form 10-Q for further details.
Previous wording
Our principal sources of liquidity have been existing cash and cash equivalents, cash generated from operations and borrowings under the Senior Notes and Senior Secured Credit Facilities. Our principal uses of cash will be to provide working capital, meet debt service requirements, fund capital expenditures, dividend payments, and finance strategic plans, including possible acquisitions. We may also seek to finance capital expenditures under capital leases or other debt arrangements that provide liquidity or favorable borrowing terms. We continue to consider acquisition opportunities, but the size and timing of any future acquisitions and the related potential capital requirements cannot be predicted. In the event that suitable businesses are available for acquisition upon acceptable terms, we may obtain all or a portion of the necessary financing through the incurrence of additional long-term borrowings. As market conditions warrant, we may from time to time, seek to repay loans that we have borrowed, including the borrowings under the Senior Notes and Senior Secured Credit Facilities. Based on our current level of operations and available cash, we believe our cash flow from operations, together with availability under the Revolving Credit Facility, will provide sufficient liquidity to fund our current obligations, projected working capital requirements, debt service requirements and capital spending requirements for the foreseeable future. Our business may not generate sufficient cash flows from operations or future borrowings may not be available to us under our Revolving Credit Facility in an amount sufficient to enable us to pay our indebtedness, or to fund our other liquidity needs. Our ability to do so depends on, among other factors, prevailing economic conditions, many of which are beyond our control. In addition, upon the occurrence of certain events, such as a change in control, we could be required to repay or refinance our indebtedness. We may not be able to refinance any of our indebtedness, including the Senior Notes and Senior Secured Credit Facilities, on commercially reasonable terms or at all. Any future acquisitions, joint ventures, or other similar transactions may require additional capital and there can be no assurance that any such capital will be available to us on acceptable terms or at all.
Current wording
Our principal sources of liquidity have been existing cash and cash equivalents, cash generated from operations and borrowings under the Senior Notes and Former Senior Secured Credit Facilities. Our principal uses of cash will be to provide working capital, meet debt service requirements, fund capital expenditures, dividend payments, and finance strategic plans, including possible acquisitions. We may also seek to finance capital expenditures under capital leases or other debt arrangements that provide liquidity or favorable borrowing terms. We continue to consider acquisition opportunities, but the size and timing of any future acquisitions and the related potential capital requirements cannot be predicted. In the event that suitable businesses are available for acquisition upon acceptable terms, we may obtain all or a portion of the necessary financing through the incurrence of additional long-term borrowings. As market conditions warrant, we may from time to time, seek to repay loans that we have borrowed, including the borrowings under the Senior Notes. Based on our current level of operations and available cash, we believe our cash flow from operations, together with availability under the New Revolving Credit Facility, will provide sufficient liquidity to fund our current obligations, projected working capital requirements, debt service requirements and capital spending requirements for the foreseeable future. Our business may not generate sufficient cash flows from operations or future borrowings may not be available to us under our New Revolving Credit Facility in an amount sufficient to enable us to pay our indebtedness, or to fund our other liquidity needs. Our ability to do so depends on, among other factors, prevailing economic conditions, many of which are beyond our control. In addition, upon the occurrence of certain events, such as a change in control, we could be required to repay or refinance our indebtedness. We may not be able to refinance any of our indebtedness, including the Senior Notes, on commercially reasonable terms or at all. Any future acquisitions, joint ventures, or other similar transactions may require additional capital and there can be no assurance that any such capital will be available to us on acceptable terms or at all.
Previous wording
A substantial portion of our cash is in jurisdictions outside of the United States. We do not assert ASC 740-30 (formerly APB 23) indefinite reinvestment of our historical non-U.S. earnings or future non-U.S. earnings. The Company records a deferred foreign tax liability to cover all estimated withholding, state income tax and foreign income tax associated with repatriating all non-U.S. earnings back to the United States. Our deferred income tax liability as of March 31, 2024 was $55.2 million which primarily consisted of withholding taxes.
Current wording
A substantial portion of our cash is in jurisdictions outside of the United States. We do not assert ASC 740-30 (formerly APB 23) indefinite reinvestment of our historical non-U.S. earnings or future non-U.S. earnings. The Company records a deferred foreign tax liability to cover all estimated withholding, state income tax and foreign income tax associated with repatriating all non-U.S. earnings back to the United States. Our deferred income tax liability as of June 30, 2024 was $53.4 million which primarily consisted of withholding taxes.
Previous wording
Net working capital increased $59.1 million to $2,282.2 million as of March 31, 2024 from $2,223.1 million as of December 31, 2023. Operating working capital increased $166.5 million to $1,427.5 million as of March 31, 2024 from $1,261.0 million as of December 31, 2023. The increase in operating working capital is primarily due to lower accounts payable, higher inventories, higher accounts receivable, and higher contract assets, partially offset by higher contract liabilities.
Current wording
Net working capital decreased $144.5 million to $2,078.6 million as of June 30, 2024 from $2,223.1 million as of December 31, 2023. Operating working capital increased $331.7 million to $1,592.7 million as of June 30, 2024 from $1,261.0 million as of December 31, 2023. The increase in operating working capital is due to higher inventories, higher accounts receivable, lower accounts payable, and higher contract assets and lower contract liabilities.
Previous wording
The increase in accounts receivable was primarily due to the timing of revenues in the quarter and seasonal changes in collection timing. The increase in inventories was primarily due to acquisitions. The increase in contract assets was primarily due to the timing of revenue recognition and billing on our overtime contracts. The decrease in accounts payable was primarily due to the timing of vendor cash disbursements. The increase in contract liabilities was primarily due to the timing of customer milestone payments for in-process engineered to order contracts.
Current wording
The increase in accounts receivable was primarily due to the timing of revenues in the quarter and seasonal changes in collection timing. The increase in inventories was primarily due to acquisitions. The increase in contract assets was primarily due to the timing of revenue recognition and billing on our overtime contracts. The decrease in accounts payable was primarily due to the timing of vendor cash disbursements. The decrease in contract liabilities was primarily due to the timing of customer milestone payments for in-process engineered to order contracts.
Previous wording
The following table reflects the major categories of cash flows for the three month periods ended March 31, 2024 and 2023, respectively.
Current wording
The following table reflects the major categories of cash flows for the six month periods ended June 30, 2024 and 2023, respectively.
Previous wording
Cash provided by operating activities decreased $8.7 million to $161.6 million for the three month period ended March 31, 2024 from $170.3 million in the same three month period in 2023. This decrease is primarily attributable to cash used as a result of a larger increase in operating working capital and an increase in tax payments in 2024, compared to 2023, as well as the timing of interest payments for our senior notes, partially offset by higher net income.
Current wording
Cash provided by operating activities increased $67.8 million to $466.5 million for the six month period ended June 30, 2024 from $398.7 million in the same six month period in 2023. This increase is primarily attributable to higher net income, the timing of interest payments for our Senior Notes, and a smaller increase in operating working capital, partially offset by an increase in tax payments in 2024, compared to 2023.
Previous wording
Cash used in investing activities included capital expenditures of $62.3 million and $22.4 million for the three month periods ended March 31, 2024 and 2023, respectively. Net cash paid in acquisitions was $143.3 million and $566.4 million in the three month periods ended March 31, 2024 and 2023, respectively. The three month period ended March 31, 2023 also included proceeds of $7.3 million related to the sale of a closed facility.
Current wording
Cash used in investing activities included capital expenditures of $84.1 million and $47.2 million for the six month periods ended June 30, 2024 and 2023, respectively. Net cash paid in acquisitions was $2,744.0 million and $615.8 million in the six month periods ended June 30, 2024 and 2023, respectively.
Previous wording
Cash used in financing activities of $79.6 million for the three month period ended March 31, 2024 primarily reflected purchases of treasury stock of $72.9 million, cash dividends on common stock of $8.1 million, repayments of long-term debt of $7.1 million, and payments of deferred and contingent acquisition consideration of $2.2 million, partially offset by proceeds from stock option exercises of $11.2 million.
Current wording
Cash provided by financing activities of $1,862.0 million for the six month period ended June 30, 2024 primarily reflected proceeds from long-term debt of $3,296.9 million and proceeds from stock option exercises of $22.7 million, partially offset by repayments of long-term debt of $1,240.7 million, purchases of treasury stock of $135.5 million, payments of debt issuance costs of $32.3 million, payments of $19.9 million to settle certain cross-currency swaps, cash dividends on common stock of $16.1 million, and payments of deferred and contingent acquisition consideration of $12.0 million.
Previous wording
Cash used in financing activities of $89.3 million for the three month period ended March 31, 2023 primarily reflected purchases of treasury stock of $77.0 million, repayments of long-term debt of $11.0 million and cash dividends on common stock of $8.1 million, partially offset by proceeds from stock option exercises of $9.2 million.
Current wording
Cash used in financing activities of $165.7 million for the six month period ended June 30, 2023 primarily reflected purchases of treasury stock of $132.8 million, repayments of long-term debt of $20.6 million and cash dividends on common stock of $16.2 million, partially offset by proceeds from stock option exercises of $15.6 million.
Previous wording
Free cash flow decreased $48.6 million to $99.3 million in the three month period ended March 31, 2024 from $147.9 million in the same three month period in 2023 due to higher capital expenditures and lower cash provided by operating activities.
Current wording
Free cash flow increased $30.9 million to $382.4 million in the six month period ended June 30, 2024 from $351.5 million in the same six month period in 2023 due to higher cash provided by operating activities, partially offset by higher capital expenditures.
Rearranged current paragraphs (5)
Current report — wording carried from elsewhere
Gross profit for the six month period ended June 30, 2024 was $1,539.6 million, an increase of $177.9 million, or 13.1%, compared to $1,361.7 million for the same six month period in 2023, and as a percentage of revenues was 44.3% for the six month period ended June 30, 2024 and 41.1% for the same six month period in 2023. The increase in gross profit is primarily due to higher pricing and acquisitions discussed above. The increase in gross profit as a percentage of revenues is primarily due to increased price and input cost productivity improvements.
Current report — wording carried from elsewhere
Interest expense was $87.6 million for the six month period ended June 30, 2024, an increase of $7.9 million, compared to $79.7 million in the same six month period in 2023. The increase was primarily due to an increase in long term debt, partially offset by the interest rate derivative contracts discussed in Note 13 “Hedging Activities and Derivative Instruments” to our unaudited condensed consolidated financial statements included elsewhere in this Form 10-Q. The weighted average interest rate, including the impact of the interest rate derivative contracts, was approximately 5.2% for the six month period ended June 30, 2024 and 5.3% in the same period in 2023.
Current report — wording carried from elsewhere
Other income, net was $31.3 million and $17.8 million in the six month periods ended June 30, 2024 and 2023, respectively. The increase was primarily due to an increase in interest income from holdings of cash and cash equivalents.
Current report — wording carried from elsewhere
The provision for income taxes was $100.5 million, resulting in a 19.9% effective income tax provision rate for the six month period ended June 30, 2024, compared to a provision for income taxes of $108.6 million, resulting in a 24.1% effective income tax provision rate in the same six month period in 2023. The decrease in the tax provision for the six month period ended June 30, 2024 is primarily due to a decrease in the pretax book income in jurisdictions with higher effective tax rates combined with an increase in earnings in jurisdictions with lower rates and a benefit from a windfall tax deduction.
Current report — wording carried from elsewhere
Represents $178.6 million and $176.9 million of amortization of intangible assets arising from the acquisition of Ingersoll Rand Industrial and other acquisitions (customer relationships, technology, tradenames and backlog) and $4.2 million and $5.2 million of amortization of non-acquisition related intangible assets, in each case, for the six month periods ended June 30, 2024 and 2023, respectively.