Ingersoll Rand’s debt at the end of 2Q16
As you can see in the table below, in 2Q16, Ingersoll Rand’s (IR) debt and net debt have decreased by 9% and 18%, respectively, over 1Q16. IR’s debt decreased in 2Q16 on the back of 52% decrase in short-term borrowings and current maturities of long-term debt, as compared to 1Q16.
This amount is included under the company’s current liabilities, which stood at $361 million at the end of 2Q16, as compared to $758 million in 1Q16. The short-term loan was raised in preceding quarters to fulfill working capital requirements. Inventories and other current assets increased sequentially by 1% and 16%, respectively. In 2Q16, inventory stood at $1601 million and other current assets at $364 million.
As of March 31, 2016, IR had $4.4 billion of debt (long-term debt plus short-term borrowings and current maturities of long-term debt) against equity of $5.8 billion, implying a debt-to-equity ratio of ~0.76x. Its cash stood at $613 million.
Ingersoll Rand’s liquidity
IR had $929 million in cash and cash equivalents on its balance sheet on June 30, 2016. According to the company guidance, it expects to generate free cash flows of about $1.0 billion–$1.1 billion in fiscal 2016, excluding proceeds from the Hussmann deal.
IR is a part of the Guggenheim Mid-Cap Core ETF (CZA) and accounts for 2.03% of the fund’s total holdings. Investors in this ETF could benefit if IR continues to deliver and achieves its targets set for 2016. St. Jude Medical (STJ), Energy Transfer Partners (ETP), and Vornado Realty Trust (VNO) are among the top ten holdings of the fund, accounting for 2.7%, 2.3%, and 2.3%, respectively. IR is also part of S&P 500 (SPY).
In next the part, we’ll discuss when Ingersoll Rand’s Hussmann deal is expected to be closed.