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l | Continuing EPS of $2.11, up 50 percent; adjusted continuing EPS* of $1.75, up 22 percent |
l | Reported and organic bookings* up 11 percent; sustained growth in Climate and Industrial |
l | Reported and organic revenues* up 10 percent; continued strength in Climate and Industrial |
l | Operating margin expansion of 80 bps; adjusted operating margin* higher by 100 bps |
l | Continuing EPS guidance is raised to between $5.70 - $5.75 and adjusted continuing EPS guidance is raised to between $5.55 - $5.60 for full year 2018 |
*This news release contains non-GAAP financial measures. Definitions of the non-GAAP financial measures can be found in the footnotes of this news release. See attached tables for additional details and reconciliations. |
$, millions except EPS | Q3 2018 | Q3 2017 | Y-O-Y Change | Organic Y-O-Y Change |
Bookings | $4,050 | $3,646 | 11% | 11% |
Net Revenues | $4,031 | $3,671 | 10% | 10% |
Operating Income | $587 | $506 | 16% | |
Operating Margin | 14.6% | 13.8% | 0.8 PPts | |
Adjusted Operating Income* | $607 | $516 | 18% | |
Adjusted Operating Margin | 15.1% | 14.1% | 1.0 PPts | |
Continuing EPS | $2.11 | $1.41 | 50% | |
Adjusted Continuing EPS | $1.75 | $1.44 | 22% | |
Restructuring Cost | ($20.1) | ($10.0) | ($10.1) |
• | Strong bookings and revenue growth across virtually all businesses, products and geographies. |
• | Enterprise services and parts reported revenues grew 11 percent, outpacing strong equipment reported revenue growth of 9 percent. |
• | Enterprise reported revenue growth included approximately 1 percentage point of growth from acquisitions offset by approximately 1 percentage point negative foreign exchange impact. |
• | Operating margin improved 80 basis points; adjusted operating margin up 100 basis points driven by strong revenue growth, positive price and productivity partially offset by material inflation, including tariffs and other inflation. |
$, millions | Q3 2018 | Q3 2017 | Y-O-Y Change | Organic Y-O-Y Change |
Bookings | $3,241 | $2,886 | 12% | 12% |
Net Revenues | $3,239 | $2,939 | 10% | 10% |
Operating Income | $536 | $480 | 12% | |
Operating Margin | 16.5% | 16.3% | 0.2 PPts | |
Adjusted Operating Income | $551 | $486 | 13% | |
Adjusted Operating Margin | 17.0% | 16.5% | 0.5 PPts |
• | Climate reported and organic bookings up 12 percent. Reported and organic revenue up 10 percent. |
• | Broad-based revenue growth in all businesses and regions with Climate services and parts revenue growth of 12 percent exceeding continued strong equipment revenue growth of 9 percent. |
• | Climate reported revenue growth included approximately 1 percentage point of growth from acquisitions offset by approximately 1 percentage point negative foreign exchange impact. |
• | Operating margin improved 20 basis points; adjusted operating margins improved 50 basis points driven by strong price realization, volume growth and productivity; offset by inflationary headwinds and continued business investments. |
$, millions | Q3 2018 | Q3 2017 | Y-O-Y Change | Organic Y-O-Y Change |
Bookings | $809 | $760 | 6% | 7% |
Net Revenues | $792 | $731 | 8% | 9% |
Operating Income | $111 | $89 | 25% | |
Operating Margin | 14.0% | 12.2% | 1.8 PPts | |
Adjusted Operating Income | $116 | $93 | 25% | |
Adjusted Operating Margin | 14.6% | 12.7% | 1.9 PPts |
• | Bookings up 6 percent and organic bookings up 7 percent. Revenue up 8 percent with organic revenue up 9 percent. |
• | Strong revenue growth in both equipment (9 percent) and services (8 percent) with growth in all businesses. |
• | Industrial reported revenue growth included approximately 1 percentage point of growth from acquisitions offset by approximately 2 percentage points negative foreign exchange impact. |
• | Operating margin improved 180 basis points; adjusted operating margin up 190 basis points driven by strong revenue growth, pricing and productivity actions. |
$, millions | Q3 2018 | Q3 2017 | Y-O-Y Change |
Cash From Continuing Operating Activities Y-T-D | $946 | $891 | $55 |
Free Cash Flow Y-T-D* | $724 | $766 | ($42) |
Working Capital/Revenue* | 5.2% | 5.0% | 20 bps increase |
Cash Balance 30 September | $1,023 | $1,259 | ($236) |
Debt Balance 30 September | $4,090 | $4,063 | $27 |
• | Third-quarter 2018 cash flow from continuing operating activities was $532 million, consistent with the company’s expectations and normal business seasonality. |
• | Maintaining inventory levels to support strong revenue growth; working capital / revenue on track. |
• | Continued execution of a balanced capital allocation strategy. |
• | Year to date, the company has returned over $850 million to shareholders through share repurchases ($514 million) and dividends ($351 million). |
• | In October, the company also authorized a new share repurchase program of up to $1.5 billion bringing the total available authorization to ~$1.9 billion. |
• | The company continues to have a healthy pipeline of acquisition opportunities. |
Targets | Prior FY Guidance | Updated FY Guidance |
EPS continuing | ~$5.25 | $5.70 to $5.75 |
Restructuring - (add back) | $(0.20) | ~$(0.28) |
Debt redemption / other items - (add back) | $(0.05) | $(0.05) |
Tax related items - (subtract) | N/A | ~$0.48 |
EPS continuing - adjusted | ~$5.50 | $5.55 to $5.60 |
• | Table 1: Condensed Consolidated Income Statement |
• | Table 2: Business Review |
• | Tables 3 - 5: Reconciliation of GAAP to Non-GAAP |
• | Table 6: Condensed Consolidated Balance Sheets |
• | Table 7: Condensed Consolidated Statement of Cash Flows |
• | Table 8: Balance Sheet Metrics and Free Cash Flow |
Contacts: | |
Media: | Investors: |
Perri Richman | Zac Nagle |
732-319-1024, prichman@irco.com | 704-990-3913, InvestorRelations@irco.com |
• | Currency impacts on net revenues and bookings are measured by applying the prior year’s foreign currency exchange rates to the current period’s net revenues and bookings reported in local currency. This measure allows for a direct comparison of operating results excluding the year-over-year impact of foreign currency translation. |
• | Working capital is calculated by adding net accounts and notes receivables and inventories and subtracting total current liabilities that exclude short term debt, dividend payables and income tax payables. |
• | Working capital as a percent of revenue is calculated by dividing the working capital balance (e.g. as of September 30) by the annualized revenue for the period (e.g. reported revenues for the three months ended September 30 multiplied by 4 to annualize for a full year). |
For the quarter | For the nine months | ||||||||||||||
ended September 30, | ended September 30, | ||||||||||||||
2018 | 2017 | 2018 | 2017 | ||||||||||||
Net revenues | $ | 4,030.9 | $ | 3,670.5 | $ | 11,773.1 | $ | 10,579.5 | |||||||
Cost of goods sold | (2,718.3 | ) | (2,489.9 | ) | (8,102.6 | ) | (7,269.1 | ) | |||||||
Selling and administrative expenses | (725.6 | ) | (674.5 | ) | (2,199.8 | ) | (2,031.7 | ) | |||||||
Operating income | 587.0 | 506.1 | 1,470.7 | 1,278.7 | |||||||||||
Interest expense | (48.5 | ) | (53.9 | ) | (171.7 | ) | (162.0 | ) | |||||||
Other income/(expense), net | (8.5 | ) | (7.6 | ) | (16.0 | ) | (23.8 | ) | |||||||
Earnings before income taxes | 530.0 | 444.6 | 1,283.0 | 1,092.9 | |||||||||||
Benefit (provision) for income taxes | 1.1 | (76.4 | ) | (159.9 | ) | (243.2 | ) | ||||||||
Earnings from continuing operations | 531.1 | 368.2 | 1,123.1 | 849.7 | |||||||||||
Discontinued operations, net of tax | (11.7 | ) | 3.7 | (27.0 | ) | 5.5 | |||||||||
Net earnings | 519.4 | 371.9 | 1,096.1 | 855.2 | |||||||||||
Less: Net earnings attributable to noncontrolling interests | (4.3 | ) | (4.9 | ) | (12.5 | ) | (12.5 | ) | |||||||
Net earnings attributable to Ingersoll-Rand plc | $ | 515.1 | $ | 367.0 | $ | 1,083.6 | $ | 842.7 | |||||||
Amounts attributable to Ingersoll-Rand plc | |||||||||||||||
ordinary shareholders: | |||||||||||||||
Continuing operations | $ | 526.8 | $ | 363.3 | $ | 1,110.6 | $ | 837.2 | |||||||
Discontinued operations | (11.7 | ) | 3.7 | (27.0 | ) | 5.5 | |||||||||
Net earnings | $ | 515.1 | $ | 367.0 | $ | 1,083.6 | $ | 842.7 | |||||||
Diluted earnings (loss) per share attributable to | |||||||||||||||
Ingersoll-Rand plc ordinary shareholders: | |||||||||||||||
Continuing operations | $ | 2.11 | $ | 1.41 | $ | 4.43 | $ | 3.22 | |||||||
Discontinued operations | (0.05 | ) | 0.02 | (0.11 | ) | 0.02 | |||||||||
Net earnings | $ | 2.06 | $ | 1.43 | $ | 4.32 | $ | 3.24 | |||||||
Weighted-average number of common shares outstanding: | |||||||||||||||
Diluted | 249.5 | 256.7 | 250.9 | 259.7 | |||||||||||
For the quarter | For the nine months | ||||||||||||||
ended September 30, | ended September 30, | ||||||||||||||
2018 | 2017 | 2018 | 2017 | ||||||||||||
Climate | |||||||||||||||
Net revenues | $ | 3,238.7 | $ | 2,939.3 | $ | 9,342.3 | $ | 8,407.2 | |||||||
Segment operating income * | 535.6 | 480.1 | 1,378.7 | 1,224.5 | |||||||||||
and as a % of Net revenues | 16.5 | % | 16.3 | % | 14.8 | % | 14.6 | % | |||||||
Industrial | |||||||||||||||
Net revenues | 792.2 | 731.2 | 2,430.8 | 2,172.3 | |||||||||||
Segment operating income * | 110.7 | 89.0 | 291.8 | 247.0 | |||||||||||
and as a % of Net revenues | 14.0 | % | 12.2 | % | 12.0 | % | 11.4 | % | |||||||
Unallocated corporate expense | (59.3 | ) | (63.0 | ) | (199.8 | ) | (192.8 | ) | |||||||
Total | |||||||||||||||
Net revenues | $ | 4,030.9 | $ | 3,670.5 | $ | 11,773.1 | $ | 10,579.5 | |||||||
Consolidated operating income | $ | 587.0 | $ | 506.1 | $ | 1,470.7 | $ | 1,278.7 | |||||||
and as a % of Net revenues | 14.6 | % | 13.8 | % | 12.5 | % | 12.1 | % |
For the quarter ended September 30, 2018 | For the nine months ended September 30, 2018 | ||||||||||||||||||||||||
As | As | As | As | ||||||||||||||||||||||
Reported | Adjustments | Adjusted | Reported | Adjustments | Adjusted | ||||||||||||||||||||
Net revenues | $ | 4,030.9 | $ | — | $ | 4,030.9 | $ | 11,773.1 | $ | — | $ | 11,773.1 | |||||||||||||
Operating income | 587.0 | 20.1 | (a) | 607.1 | 1,470.7 | 71.6 | (a) | 1,542.3 | |||||||||||||||||
Operating margin | 14.6 | % | 15.1 | % | 12.5 | % | 13.1 | % | |||||||||||||||||
Earnings from continuing operations before income taxes | 530.0 | 20.1 | (a,b) | 550.1 | 1,283.0 | 88.2 | (a,b) | 1,371.2 | |||||||||||||||||
Benefit (provision) for income taxes | 1.1 | (109.4 | ) | (c,d,e) | (108.3 | ) | (159.9 | ) | (121.4 | ) | (c,d,e) | (281.3 | ) | ||||||||||||
Tax rate | (0.2 | )% | 19.7 | % | 12.5 | % | 20.5 | % | |||||||||||||||||
Earnings from continuing operations attributable to Ingersoll-Rand plc | $ | 526.8 | $ | (89.3 | ) | (f) | $ | 437.5 | $ | 1,110.6 | $ | (33.2 | ) | (f) | $ | 1,077.4 | |||||||||
Diluted earnings per common share | |||||||||||||||||||||||||
Continuing operations | $ | 2.11 | $ | (0.36 | ) | $ | 1.75 | $ | 4.43 | $ | (0.14 | ) | $ | 4.29 | |||||||||||
Weighted-average number of common shares outstanding: | |||||||||||||||||||||||||
Diluted | 249.5 | — | 249.5 | 250.9 | — | 250.9 | |||||||||||||||||||
Detail of Adjustments: | |||||||||||||||||||||||||
(a) | Restructuring costs | $ | 20.1 | $ | 71.6 | ||||||||||||||||||||
(b) | Debt redemption premium and related charges | — | 16.6 | ||||||||||||||||||||||
(c) | Tax impact of adjustments (a,b) | (3.8 | ) | (17.4 | ) | ||||||||||||||||||||
(d) | Tax Reform non-cash measurement period adjustments | (77.1 | ) | (75.5 | ) | ||||||||||||||||||||
(e) | U.S. discrete non-cash tax adjustment | (28.5 | ) | (28.5 | ) | ||||||||||||||||||||
(f) | Impact of adjustments on earnings from continuing operations attributable to Ingersoll-Rand plc | $ | (89.3 | ) | $ | (33.2 | ) |
For the quarter ended September 30, 2017 | For the nine months ended September 30, 2017 | |||||||||||||||||||||||
As | As | As | As | |||||||||||||||||||||
Reported | Adjustments | Adjusted | Reported | Adjustments | Adjusted | |||||||||||||||||||
Net revenues | $ | 3,670.5 | $ | — | $ | 3,670.5 | $ | 10,579.5 | $ | — | $ | 10,579.5 | ||||||||||||
Operating income | 506.1 | 10.0 | (a) | 516.1 | 1,278.7 | 48.2 | (a) | 1,326.9 | ||||||||||||||||
Operating margin | 13.8 | % | 14.1 | % | 12.1 | % | 12.5 | % | ||||||||||||||||
Earnings from continuing operations before income taxes | 444.6 | 10.0 | (a) | 454.6 | 1,092.9 | 48.2 | (a) | 1,141.1 | ||||||||||||||||
Provision for income taxes | (76.4 | ) | (4.0 | ) | (b) | (80.4 | ) | (243.2 | ) | 18.3 | (b,c) | (224.9 | ) | |||||||||||
Tax rate | 17.2 | % | 17.7 | % | 22.3 | % | 19.7 | % | ||||||||||||||||
Earnings from continuing operations attributable to Ingersoll-Rand plc | $ | 363.3 | $ | 6.0 | (d) | $ | 369.3 | $ | 837.2 | $ | 66.5 | (d) | $ | 903.7 | ||||||||||
Diluted earnings per common share | ||||||||||||||||||||||||
Continuing operations | $ | 1.41 | $ | 0.03 | $ | 1.44 | $ | 3.22 | $ | 0.26 | $ | 3.48 | ||||||||||||
Weighted-average number of common shares outstanding: | ||||||||||||||||||||||||
Diluted | 256.7 | — | 256.7 | 259.7 | — | 259.7 | ||||||||||||||||||
Detail of Adjustments: | ||||||||||||||||||||||||
(a) | Restructuring costs | $ | 10.0 | $ | 48.2 | |||||||||||||||||||
(b) | Tax impact of adjustment (a) | (4.0 | ) | (15.0 | ) | |||||||||||||||||||
(c) | Latin America discrete non-cash tax adjustment | — | 33.3 | |||||||||||||||||||||
(d) | Impact of adjustments on earnings from continuing operations attributable to Ingersoll-Rand plc | $ | 6.0 | $ | 66.5 |
For the quarter ended September 30, 2018 | For the quarter ended September 30, 2017 | ||||||||||||
As Reported | Margin | As Reported | Margin | ||||||||||
Climate | |||||||||||||
Net revenues | $ | 3,238.7 | $ | 2,939.3 | |||||||||
Segment operating income | $ | 535.6 | 16.5 | % | $ | 480.1 | 16.3 | % | |||||
Restructuring | 14.9 | 0.5 | % | 5.5 | 0.2 | % | |||||||
Adjusted operating income | 550.5 | 17.0 | % | 485.6 | 16.5 | % | |||||||
Depreciation and amortization | 62.2 | 1.9 | % | 61.8 | 2.1 | % | |||||||
Adjusted OI plus D&A * | $ | 612.7 | 18.9 | % | $ | 547.4 | 18.6 | % | |||||
Industrial | |||||||||||||
Net revenues | $ | 792.2 | $ | 731.2 | |||||||||
Segment operating income | $ | 110.7 | 14.0 | % | $ | 89.0 | 12.2 | % | |||||
Restructuring | 4.8 | 0.6 | % | 3.8 | 0.5 | % | |||||||
Adjusted operating income | 115.5 | 14.6 | % | 92.8 | 12.7 | % | |||||||
Depreciation and amortization | 19.8 | 2.5 | % | 19.0 | 2.6 | % | |||||||
Adjusted OI plus D&A | $ | 135.3 | 17.1 | % | $ | 111.8 | 15.3 | % | |||||
Corporate | |||||||||||||
Unallocated corporate expense | $ | (59.3 | ) | $ | (63.0 | ) | |||||||
Restructuring | 0.4 | 0.7 | |||||||||||
Adjusted corporate expense | (58.9 | ) | (62.3 | ) | |||||||||
Depreciation and amortization | 6.7 | 7.0 | |||||||||||
Adjusted corporate expense plus D&A | $ | (52.2 | ) | $ | (55.3 | ) | |||||||
Total Company | |||||||||||||
Net revenues | $ | 4,030.9 | $ | 3,670.5 | |||||||||
Operating income | $ | 587.0 | 14.6 | % | $ | 506.1 | 13.8 | % | |||||
Restructuring | 20.1 | 0.5 | % | 10.0 | 0.3 | % | |||||||
Adjusted operating income | 607.1 | 15.1 | % | 516.1 | 14.1 | % | |||||||
Depreciation and amortization | 88.7 | 2.2 | % | 87.8 | 2.4 | % | |||||||
Adjusted OI plus D&A | $ | 695.8 | 17.3 | % | $ | 603.9 | 16.5 | % |
September 30, | December 31, | ||||||
2018 | 2017 | ||||||
ASSETS | UNAUDITED | ||||||
Cash and cash equivalents | $ | 1,022.5 | $ | 1,549.4 | |||
Accounts and notes receivable, net | 2,752.1 | 2,477.4 | |||||
Inventories, net | 1,821.4 | 1,555.4 | |||||
Other current assets | 486.6 | 536.9 | |||||
Total current assets | 6,082.6 | 6,119.1 | |||||
Property, plant and equipment, net | 1,673.4 | 1,551.3 | |||||
Goodwill | 5,989.0 | 5,935.7 | |||||
Intangible assets, net | 3,679.7 | 3,742.9 | |||||
Other noncurrent assets | 879.8 | 824.3 | |||||
Total assets | $ | 18,304.5 | $ | 18,173.3 | |||
LIABILITIES AND EQUITY | |||||||
Accounts payable | $ | 1,748.7 | $ | 1,556.1 | |||
Accrued expenses and other current liabilities | 2,224.7 | 2,164.9 | |||||
Short-term borrowings and current maturities of long-term debt | 350.6 | 1,107.0 | |||||
Total current liabilities | 4,324.0 | 4,828.0 | |||||
Long-term debt | 3,739.8 | 2,957.0 | |||||
Other noncurrent liabilities | 2,897.5 | 3,181.4 | |||||
Shareholders' equity | 7,343.2 | 7,206.9 | |||||
Total liabilities and equity | $ | 18,304.5 | $ | 18,173.3 |
For nine months | |||||||
ended September 30, | |||||||
2018 | 2017 | ||||||
Operating Activities | |||||||
Earnings from continuing operations | $ | 1,123.1 | $ | 849.7 | |||
Depreciation and amortization | 273.0 | 261.9 | |||||
Changes in assets and liabilities and other non-cash items | (449.7 | ) | (220.8 | ) | |||
Net cash provided by (used in) continuing operating activities | 946.4 | 890.8 | |||||
Net cash provided by (used in) discontinued operating activities | (49.0 | ) | (17.6 | ) | |||
Net cash provided by (used in) operating activities | 897.4 | 873.2 | |||||
Investing Activities | |||||||
Capital expenditures | (251.2 | ) | (149.9 | ) | |||
Acquisition of businesses, equity method investments and other, net | (269.4 | ) | (56.5 | ) | |||
Net cash provided by (used in) investing activities | (520.6 | ) | (206.4 | ) | |||
Financing Activities | |||||||
Short-term borrowings, net | (6.4 | ) | (4.0 | ) | |||
Long-term borrowings, net | 24.1 | (7.6 | ) | ||||
Dividends paid to ordinary shareholders | (351.2 | ) | (318.0 | ) | |||
Repurchase of ordinary shares | (514.1 | ) | (911.1 | ) | |||
Other financing activities, net | (21.3 | ) | 18.2 | ||||
Net cash provided by (used in) financing activities | (868.9 | ) | (1,222.5 | ) | |||
Effect of exchange rate changes on cash and cash equivalents | (34.8 | ) | 100.0 | ||||
Net increase (decrease) in cash and cash equivalents | (526.9 | ) | (455.7 | ) | |||
Cash and cash equivalents - beginning of period | 1,549.4 | 1,714.7 | |||||
Cash and cash equivalents - end of period | $ | 1,022.5 | $ | 1,259.0 |
September 30, | September 30, | December 31, | |||||||||||
2018 | 2017 | 2017 | |||||||||||
Net Receivables | $ | 2,752 | $ | 2,468 | $ | 2,477 | |||||||
Days Sales Outstanding | 62.3 | 61.4 | 62.5 | ||||||||||
Net Inventory | $ | 1,821 | $ | 1,661 | $ | 1,555 | |||||||
Inventory Turns | 6.0 | 6.0 | 6.5 | ||||||||||
Accounts Payable | $ | 1,749 | $ | 1,488 | $ | 1,556 | |||||||
Days Payable Outstanding | 58.7 | 54.5 | 55.8 | ||||||||||
------------------------------------------------------------------------------------------------------------------------------------------------------- | |||||||||||||
Nine months ended | Nine months ended | ||||||||||||
September 30, 2018 | September 30, 2017 | ||||||||||||
Cash flow provided by continuing operating activities | $ | 946.4 | $ | 890.8 | |||||||||
Capital expenditures | (251.2 | ) | (149.9 | ) | |||||||||
Cash payments for restructuring | 28.7 | 25.2 | |||||||||||
Free cash flow | $ | 723.9 | $ | 766.1 | |||||||||
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CIK: 1466258Events:
Form Type: 8-K Corporate News
Accession Number: 0001466258-18-000220
Submitted to the SEC: Wed Oct 24 2018 8:45:34 AM EST
Accepted by the SEC: Wed Oct 24 2018
Period: Wednesday, October 24, 2018
Industry: Auto Controls For Regulating Residential And Comml Environments