Bank of America Merrill Lynch Global Industrials Conference March 2019
Safe Harbor This presentation includes “forward - looking statements” which are statements that are not historical facts, including statements that relate to the mix of and demand for our products; performance of the markets in which we operate; our share repurchase program including the amount of shares to be repurchased and timing of such repurchases; our capital allocation strategy including projected acquisitions; the proposed transaction to acquire PFS and the timing thereof; restructuring activity; our projected 2019 full-year financial performance and our projected 2017 to 2020 financial performance and targets including assumptions regarding our effective tax rate, tax reform measurement period adjustments and other factors described in our guidance. These forward-looking statements are based on our current expectations and are subject to risks and uncertainties, which may cause actual results to differ materially from our current expectations. Such factors include, but are not limited to, global economic conditions; our ability to timely obtain, if ever, necessary regulatory approvals of the proposed transaction to acquire PFS; the outcome of any litigation; demand for our products and services, and tax law changes and interpretations. Additional factors that could cause such differences can be found in our Form 10-K for the year ended December 31, 2018, as well as our subsequent reports on Form 10-Q and other SEC filings. We assume no obligation to update these forward-looking statements. This presentation also includes non-GAAP financial information which should be considered supplemental to, not a substitute for, or superior to, the financial measure calculated in accordance with GAAP. The definitions of our non-GAAP financial information are included as an appendix in our presentation and reconciliations can be found in our earnings releases for the relevant periods located on our website at www.ingersollrand.com. All data beyond the fourth quarter of 2018 are estimates. 2
A Global Leader in Energy Efficiency and Productivity Two Segments Key Metrics (Revenues 2018) Manufacturing locations 52 worldwide Employees ~49,000 Industrial $3.3B $12.4B Climate Market cap ~$25B # of countries we sell products 100+ 3
Diversified Business With High Aftermarket Mix Segment Distribution Regional Mix Revenue Streams 4% Latin America Asia Pacific 13% Industrial Parts and Services 33% Europe, Middle 15% East, Africa $15.7B North America Equipment 68% 67% Climate All figures are FY 2018. 4
Leading Brands and Market Positions Commercial HVAC Residential HVAC Transport Refrigeration ● World leader in HVAC ● Leader in heating and air ● World leader in refrigerated conditioning solutions transportation Industrial and Process Fluid Handling Golf and Utility Vehicles ● Leader in compression ● World leader in reliable fluid ● A world leader in small technologies, specialty handling equipment electric vehicles tools & material handling 5
Climate Segment: Diversified and Resilient Performance Segment Mix Regional Mix Revenue Streams 4% Latin America 10% Commercial Asia Pacific Transport HVAC Parts and Services 32% Refrigeration Europe, Middle Equipment 15% East, Africa $12.4B Residential HVAC 71% North America Equipment 68% Commercial HVAC Service Parts & Contracting • High and growing recurring revenue streams – services / parts • Balanced mix of services, energy services, connected buildings, residential and transport solutions All figures are FY 2018. 6
Industrial Segment: Diversified and Resilient Performance Business Units Regional Mix Revenue Streams 3% India Small Electric 4% Latin America Industrial Vehicles 17% Comp. Europe, ME, Africa Parts and Service 39% 21% Asia Pacific $3.3B Industrial Engineered Products 1 Comp. Equipment 61% 55% North America Parts & Service Compression Technologies & Services 1. Industrial Products includes Power Tools, Fluid Management, and Material Handling. All figures are FY 2018. 7
Robust Financial Model Drives Powerful Cash Flow (2014 – 2018) 1. Attractive, diversified 2. Leading brands, market positions – outgrowing market rates end markets $5.7 billion free cash flow over the last 5 years 5. Investing for growth 3. Focused on margin and profitability expansion (growth / op. excellence) 4. Delivering powerful free cash flow * Includes certain Non- GAAP financial measures. See the company’s website for additional details and reconciliations. 8
Driving Sustained Growth and Operating Margin Improvement Revenue Adjusted Continuing EPS In Billions $16 $6.00 14% 5% $5.00 $15 CAGR CAGR $4.00 $14 $3.00 $13 $2.00 $12 $1.00 $11 $0.00 $10 2014 2015 2016 2017 2018 2014 2015 2016 2017 2018 Cumulative Free Cash Flow Adjusted Operating Margin In Billions $5.7 $6 Avg. FCF % of Adj. NI = 102% 14% $5 +1.8 $4.5 Ppts $4 $3.1 12% $3 $1.8 $2 10% $0.8 $1 8% $- 2014 2015 2016 2017 2018 2014 2015 2016 2017 2018 * Includes certain Non- GAAP financial measures. See the company’s website for additional details and reconciliations. * 2016 Adj Op Margin retrospectively restated for the adoption of accounting standard ASU 2017-07 on January 1, 2017. Non-service pension costs that were previously 9 reported in COGS and SG&A expense are now reported in other income/expense, net. This has no net impact to EPS. 2014 and 2015 Adj Op Margin was not restated.
Dynamic and Balanced Capital Deployment Focused on Maximizing Shareholder Value (2014 – 2018) $8.3 Billion Capital Share Mergers & Dividends Expenditures Buyback Acquisitions • ~$1.8B dividends paid • ~$1.3B Capex • $3.8B • ~$1.4B on 22 • ~20% CAGR dividend acquisitions • ~54 million shares per share repurchased • Long history of growing dividend 10
Ingersoll Rand 2020 Targets* Year-End 2017 to 2020 Targets Revenue Growth ~4% to ~4.5% CAGR Adjusted Operating Margins ~14.5% to ~15% in 2020 Adjusted Continuing EPS Growth ~11% to ~13% CAGR Based on ~22% tax rate Free Cash Flow (% Net Income) >=1.0 times Balanced Cap Deployment of Excess Cash ~100% of FCF on avg. - Competitive and Growing Dividend - Share buyback - M&A * Includes certain Non- GAAP financial measures. See the company’s website for additional details and reconciliations. 11 * Information from May 2017 Ingersoll Rand Analyst Day --- NOT AN UPDATE OR REAFFIRMATION
Consistent Strategy Execution Delivers Profitable Growth and Powerful Cash Flow Nexus of sustainability Margin improvement Reinvestment, dividends, Commitment to and energy efficiency and powerful cash flow share repurchase and integrity, ingenuity and global megatrends acquisitions engagement Sustainable growth Strong operating system Powerful cash flow and balanced capital allocation above GDP and sustainable culture Stable and recurring free cash flow: $5.7B past 5 Years 12 * Includes certain Non- GAAP financial measures. See the company’s website for additional details and reconciliations.
Global Mega Trends Play to Our Strengths Global Mega Trends Our Strengths • Climate change • Reduce energy demand and greenhouse gas emissions • Urbanization • Improve efficiency in: • Natural resource scarcity – Buildings • Digital connectedness and – Industrial processes technologies – Transportation 13
Significant Ongoing Business Investments Support Growth and Profitability Business Investments Key Examples ● ~90 major new products / services throughout the world in 2018 ~20% CAGR ● New low-global warming potential refrigerants ● Digital / controls / wireless technology ● Channel expansion ● Parts and services capabilities / offerings ● Sales and services capabilities ● Operational excellence initiatives 2014 2018 14
Growth and Profitability Opportunities from Ongoing Business Investments Subset of Incremental Opportunities Contributing to 2020 Targets* ~$200M ~$400M ~$300M ~$100M Climate Variable Refrigerant Flow Energy Services Digital Customer Experience Auxiliary Power Unit ~$40M Operating Income ~$100M ~$175M ~$90M Industrial Engineered to Order Personal Transportation Compression Tech Services Industrial Products * Information from May 2017 Ingersoll Rand Analyst Day --- NOT AN UPDATE OR REAFFIRMATION 15
Business Operating System Delivers Results 1 Drive innovation and productivity 2 Proven & unique system to accelerate profitable growth 3 Committed to sustainability and energy efficiency 4 Focus on employee engagement 16
Widely Recognized for Global Citizenship, Sustainability, Diversity and Inclusion and Employee Engagement Sustainability Diversity and Inclusion Citizenship 1 st in our Industry to sign onto Global 100 Most Sustainable Paradigm for Parity FTSE4Good Index Series Corporations for 5 th consecutive year 2 nd consecutive year Fortune World’s Most Admired list for 7 th year Employee Engagement 2018 Dow Jones Sustainability World and North America Top Quartile in Manufacturing for 8 th consecutive year U.S Chamber of Commerce Industry for 5 th consecutive year 2018 Corporate Citizenship Award Winner for Best Environmental Stewardship 17
Fourth-Quarter 2018 Results January 30, 2019
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