Ingersoll RandCapital Allocation Strategy Update
September 2, 2021
Forward-Looking Statements
This presentation contains “forward-looking statements” as that term is defined in Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as
amended by the Private Securities Litigation Reform Act of 1995, including statements related to Ingersoll Rand Inc.’s (the “Company” or “Ingersoll Rand” and f/k/a Gardner Denver Holdings, Inc. or “Gardner
Denver”) expectations regarding the performance of its business, its financial results, its liquidity and capital resources and other non-historical statements, including statements regarding the Company’s
capital allocation framework, the completed transactions between Ingersoll Rand plc’s Industrial segment (“Ingersoll Rand Industrial”) and the Company and Seepex GmbH and the Company and the
recently-announced proposed transaction between the Company and Maximus Solutions (collectively, the “transactions”). These forward-looking statements generally are identified by the words “believe,”
“project,” “expect,” “anticipate,” “estimate,” “forecast,” “outlook,” “target,” “endeavor,” “seek,” “predict,” “intend,” “strategy,” “plan,” “may,” “could,” “should,” “will,” “would,” “will be,” “on track to” “will continue,”
“will likely result,” or the negative thereof or variations thereon or similar terminology generally intended to identify forward-looking statements. All statements other than historical facts, including, but not
limited to, statements regarding the expected benefits of the Company’s capital allocation framework and the transactions, including future financial and operating results and strategic benefits, the tax
consequences of the transactions, and the combined company’s plans, objectives, expectations and intentions, legal, economic and regulatory conditions, the future impact of the ongoing coronavirus
(COVID-19) pandemic on the Company’s business and any assumptions underlying any of the foregoing, are forward-looking statements.
These forward-looking statements are based on Ingersoll Rand’s current expectations and are subject to risks and uncertainties, which may cause actual results to differ materially from these current
expectations. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those indicated or anticipated by such
forward-looking statements. The inclusion of such statements should not be regarded as a representation that such plans, estimates or expectations will be achieved. Important factors that could cause
actual results to differ materially from such plans, estimates or expectations include, among others, (1) the impact on the Company’s business, suppliers and customers and global economic conditions of the
COVID-19 pandemic; (2) unexpected costs, charges or expenses resulting from the completed and proposed business combinations; (3) uncertainty of the expected financial performance of the Company;
(4) failure to realize the anticipated benefits of the completed and proposed business combinations, including as a result of delay in integrating the businesses of Gardner Denver and Ingersoll Rand
Industrial; (5) the ability of the Company to implement its business strategy; (6) difficulties and delays in achieving revenue and cost synergies; (7) inability of the Company to retain and hire key personnel;
(8) risks and uncertainties with respect to the Seepex GmbH and Maximus Solutions acquisitions, including, without limitation, that one or more closing conditions to the proposed Maximus Solutions
transaction, including certain regulatory approvals, may not be satisfied or waived, on a timely basis or otherwise, or that the proposed Maximus Solutions transaction may not be completed on the terms or
in the time frame expected by the Company, or at all; (9) evolving legal, regulatory and tax regimes; (10) changes in general economic and/or industry specific conditions; (11) actions by third parties,
including government agencies; (12) adverse impact on our operations and financial performance due to natural disaster, catastrophe, pandemic or other event events outside of our control; and (13) other
risk factors detailed in Ingersoll Rand’s most recent Annual Report on Form 10-K filed with the Securities and Exchange Commission (the “SEC”), as such factors may be updated from time to time in its
periodic filings with the SEC, which are available on the SEC’s website at http://www.sec.gov. The foregoing list of important factors is not exclusive.
Any forward-looking statements speak only as of the date of this presentation. Ingersoll Rand undertakes no obligation to update any forward-looking statements, whether as a result of new information or
developments, future events or otherwise, except as required by law. Readers are cautioned not to place undue reliance on any of these forward-looking statements.
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Well-Positioned to Deliver Outsized Growth and Returns
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Focused on organic growth and market outperformance in high growth, sustainable end markets
M&A remains the principal lever through highly strategic, high return on capital acquisitions
Enhancing capital allocation strategy with initiation of dividend and establishment of share
repurchase program
Prudently maintaining a strong balance sheet in alignment with modest leverage expectations
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Effective Capital Allocation is a Critical Pillar of Our Strategy
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Deploy
Talent
Accelerate
Growth
Expand
Margins
Allocate Capital
Effectively
Operate
Sustainably
Executing Against Our Strategic Vision
Today’s Call
Significantly Transformed Our Portfolio Since the GDI / IR Merger
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Industrial Technologies
and Services
Precision and Science
Technologies
Specialty Vehicle
Technologies
High Pressure
Solutions
Divested in Q2 2021
Club Car Transaction Overview
On June 1, 2021, completed the sale
of Specialty Vehicle Technologies
(“Club Car”) segment to Platinum
Equity for $1.68 billion
Implied multiple of ~12.1x EV / 2020A
Adjusted EBITDA
HPS Transaction Overview
On April 1, 2021, completed the
majority interest sale of High Pressure
Solutions (“HPS”) business to
American Industrial Partners
Received cash proceeds of
approximately $300 million at closing
for majority interest and retained a
45% common equity interest in the
business
Focuses Ingersoll Rand on providing mission-critical flow creation and
industrial solutions to high growth, sustainability-focused industrial, life
sciences and healthcare markets
Significantly reduces Ingersoll Rand’s net leverage and provides
significant capital flexibility
Reinforced commitment to employee ownership by honoring all-
employee equity grant though continuing vesting and/or replacing with
new equity plan in go-forward companies
Use of IRX accelerated both processes and continues to drive
execution of portfolio optimization
Materially eliminates upstream oil and gas exposure in continued
operations to align with ESG priorities
Transforming Ingersoll Rand into a High Growth, High Margin Company
Segment Structure as of Q1 2020
Portfolio Transformation Highlights
Organic Reinvestment Leading to Above Market Growth
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Growth Drivers Execution Priorities
Talent / Engagement
$150 million equity grant to all employees in 2020
Implementing IRX through 250+ IDMs (up 233% since Q2 2020) to drive achievement of strategic priorities
Driving progress toward 2030 and 2050 Environmental Goals and 2025 Diversity, Equity and Inclusion Goals using IRX
New Product
Development
Accelerated cadence of new product introductions (e.g., in ITS Americas, cadence increased by 132% compared to 2020)
>20% of the global Oil Free Compressor portfolio revenue derived from new products launched since 2020
Aftermarket / IIoT Established partnership with Google Cloud to enable expansion of IIoT connectivity
IIoT enabled assets are up 67% YTD 2021, and by year end we are targeting to be up 250% compared to 2020
Commercial
Excellence
Expanded Demand Generation, Web and eCommerce teams to ~80 people that are now generating ~200K marketing qualified
leads annually (up ~3x from 2018)
Accelerated revenue generated from eCommerce activities across all businesses by ~70% as compared to 2020
Expanded dedicated team for Strategic Pricing to ~20 people and expecting 2021 price realization up ~2x as compared to 2020
Sustainable
End Markets
Announced $45 million multi-year investment in hydrogen technology development and manufacturing capacity expansion
Expanding addressable market for AgriTech, Animal Health, Water, Environmental and Food & Beverage
Establishing a Comprehensive Capital Allocation Strategy to Fuel Growth
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Capital Allocation
Framework
M&A
Targeting a net leverage ratio of <2.0x
Prudently managing gross debt levels
Continue progress toward investment grade credit ratings
Principal focal point of capital allocation strategy
Supported by robust pipeline of highly synergistic and growth-oriented targets to drive
outsized market performance
Share Repurchase
Board-authorized $750 million repurchase program
Enables opportunistic and efficient execution
Dividend
Initiate quarterly dividend program, expected to begin in Q4 2021 at $0.02 per share
Expected to drive broader ownership base
M&A
Share Repurchase
DividendLeverage
M&A Screening Framework Focused on Yielding Strategic, High-Quality Assets
8 ¹ ROIC defined as Net Operating Profit After Taxes divided by purchase price plus transaction expenses.
Significant focus:
Mission-critical flow
creation technologies;
high cost
of failure/low cost relative
to overall system
Data gathering / digital
solutions that enhance
customer experience and
value proposition
Secondary focus:
Highly targeted channel
acquisitions in key
geographies with strong
market share
M&A Focus Strategic Framework
Market Leader
• Market leadership in niche markets, applications or geographies
Strong Organic Growth
• Established history of strong GDP+ or greater organic growth
Sustainable End Markets
• Exposure to high growth, sustainable end markets (e.g. medical, laboratory,
food & beverage, pharmaceutical, water, wastewater, renewable energy)
High Aftermarket / Recurring Revenue Content
• Existing or potential recurring aftermarket opportunities (target 35% or
greater aftermarket content entitlement)
Strong Synergy Potential
• Opportunity to leverage Ingersoll Rand’s existing portfolio, channel,
operational excellence, and footprint to drive value creation
Enhance Digital Capabilities
• Controls, IIoT, SaaS and hardware platforms that can be scaled across IR
Financial Framework
Gross Margins
• Strong gross margins ~40% or better
Net Working Capital
• <20% as a % of Sales
Capital Intensity
• Low capex with <3% as a % of revenue
ROIC¹
• Targeting mid-teens ROIC by Year 3
of ownership
• Minimum of ROIC > WACC by Year 3
of ownership
M&A Scorecard of Significant Acquisitions Validates Investment Thesis
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2020 / 2021 SegmentMarket
Leader
Strong
Organic
Growth
Sustainable
End
Markets
Aftermarket /
Recurring
Revenue >35%
Strong
Synergy
Potential
Enhance
Digital
Capabilities
~40% Gross
Margins
<20% Net
Working
Capital
<3% Capex
Progressive cavity
pumps and digital IIoTPST
Controls and software
for AgriTech marketPST
Peristaltic and
hose pumpsPST
Vacuum pumps
and blowers ITS
• Since RMT, Ingersoll Rand has deployed >$800M on major acquisitions to support inorganic growth strategy
• With these four transactions, have replaced ~50% of the EBITDA lost from divestitures
• Assets are highly aligned to strategic and financial criteria and are elevating the quality of the portfolio
Strategic Criteria Financial Criteria
M&A Pipeline Remains Robust After Recent Announcements
We Will Remain Focused on Disciplined Capital Deployment
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As reported Q1 2021 vs. Q2 2020 Q2 2021 vs. Q2 2020
Funnel Size ~5x ~5x
Average Revenue >50% >45%
Velocity through Funnel >50% >60%
• IRX tools driving weekly progress toward
funnel KPIs with high level of engagement
from executive and P&L leadership
• Rigorous evaluation criteria applied to all
targets: 32 targets evaluated and passed
on in Q2 2021
• Funnel is probability-weighted and
comprised of only targets currently being
actioned
• Focused on strategic bolt-on targets with
high-growth, sustainable end markets,
digital capabilities and strong synergy
potential, similar to Seepex and Maximus
Solutions
Active Funnel Development
• 32 Passed Targets
• Closed Deals (e.g. Seepex, Maximus Solutions)
• SPX FLOW
Active Funnel Progression KPIs Since GDI – IR RMT
Excluded
from Q2 2021
Funnel KPIs
above
Comprehensive Capital Allocation Strategy Detail
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Dividend
• Initiate quarterly dividend program
• Expected to begin in Q4 2021 at $0.02 per share
• Expected to drive broader ownership base
Share Repurchase
• Board-authorized $750 million repurchase program
• Expect to execute over a 3-year period
• Retains flexibility and enables opportunistic and efficient execution
• Targeting a net leverage ratio of <2.0x
• May exceed in extraordinary circumstances to pursue critical
strategic objectives (e.g., highly strategic M&A) given a clear
path to coming back in line with target
• Prudently managing gross debt levels
• Continue progress toward investment grade credit ratings
Leverage
($ in millions) As of 6/30/20211 Coupon
Revolver Capacity (Undrawn) $1,016 (L + 2.00%)
Dollar Term Loan Facility Due 2027 $915 (L + 1.75%)
Euro Term Loan Facility Due 2027 $703 (L + 2.00%)
Dollar Term Loan B Due 2027 $1,874 (L + 1.75%)
Dollar Term Loan Series A Due 2027 $391 (L + 2.75%)
Other Debt $18
Total Debt $3,901
¹ Current capitalization as of Q2 2021 Quarterly Report on Form 10-Q filing.
Investor Day
Save the Date
Thursday
November 18th
8:00 am – 1:00 pm
The Langham Hotel
Boston, MA
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Key Takeaways – Investing With Ingersoll Rand
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Strong performance in 1H with momentum into Q3; 2021 is poised
to be a strong year
Continuing to differentiate Ingersoll Rand as an investment:
◦ Focusing the portfolio
◦ Investing for growth
◦ Becoming more sustainable
Delivering on our planned transformation and increasing value
for all stakeholders
Utilizing IRX to create unique execution-focused culture to deliver
sustainable value creation
Executing on strategic opportunities supported by comprehensive
capital allocation plan
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