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Ingersoll Rand Up 4% on Solid Q2 Results, Raises Guidance

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Ingersoll Rand’s second-quarter earnings

Ingersoll Rand (IR) announced its second-quarter earnings on July 25 before the markets opened. The diversified global industrial (IYJ) company surpassed analysts’ adjusted EPS estimate of $1.73 by 7.2%. With its adjusted EPS of $1.85 in the quarter, Ingersoll reported 24.2% higher earnings compared with $1.49 in the second quarter of 2017.

The markets were impressed by the company’s robust results. On July 25, Ingersoll Rand stock opened at $92.59 and rose straight to $95.21 in the first hour of trading. However, it declined from that level to $93.32 and moved steadily upward from that point. The stock was up 4.1% from its previous day’s close of $91.05.

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Major aspects of Q2 results

Ingersoll Rand (IR) reported revenues of $4.3 billion in the second quarter, up 11.5% from $3.9 billion in the second quarter of 2017. The company was able to beat analysts’ revenue estimates of $4.2 billion by 3.5%.

Ingersoll Rand’s second-quarter revenue growth was 11.0%, and its organic revenues rose 9.0%. IR witnessed growth in all products and geographies during the quarter, with robust growth in services and parts.

In the second quarter, IR’s bookings rose 18.0% to $4.5 billion from $3.8 billion in the second quarter of 2017. Its operating income rose 15.0% from $558.0 million to $640.0 million in the quarter. The company also saw an improvement of 40 basis points in its operating margin to 14.7% in the second quarter from 14.3% in the second quarter of 2017.

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Management outlook for 2018

Buoyed by its strong quarterly results, Ingersoll Rand raised its overall outlook for fiscal 2018. Here are the details:

  • IR expects reported revenue growth of 9.0%–10.0% from 5.0%–5.5% projected earlier. Its organic revenue growth is expected to be 7.0%–8.0% from 3.0%–3.5% previously predicted.
  • The company now expects EPS from continuing operations of ~$5.25 from $4.80–$5.00 guided earlier.
  • Its adjusted EPS from continuing operations could reach ~$5.50 from $5.00–$5.20 previously forecast.
  • IR expects its free cash flow for fiscal 2018 to be ~$1.38 billion from the earlier range of $1.2 billion–$1.3 billion.

Industrial companies’ Q2 earnings

Lincoln Electric Holdings (LECO), which reported its second-quarter earnings on July 23, met analysts’ expectations. On July 25, Boeing (BA) announced its second-quarter earnings, beating analysts’ earnings and revenue estimates. Trinity Industries (TRN), which manufactures rail equipment, plans to report its second-quarter earnings on July 25 after the market closes.

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