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TT Trane Technologies

Participants
Zac Nagle VP, IR
Mike Lamach Chairman and CEO
Sue Carter SVP and CFO
Joe Fimbianti Former Director of IR
Steve Winoker UBS
Jeff Sprague Vertical Research
Steve Tusa JPMorgan
Andrew Kaplowitz Citigroup
Joe Ritchie Goldman Sachs
Rich Kwas Wells Fargo
David Raso Evercore ISI
Joel Tiss BMO Capital Markets
Call transcript
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Zac Nagle

Thanks, Operator. Good morning, and thank you for joining us for Ingersoll-Rand's Fourth Quarter and Full-Year 2017 Earnings Conference Call. This call is also being webcast on our Web site at ingersollrand.com, where you'll find the accompanying presentation.

We are also recording and archiving this call on our Web site. Please go to slide two. law. call and not the are provisions Federal today's considered facts Safe in of statements forward-looking made Securities made that historical are are Harbor Statements pursuant to description Please of may see our to results. our results materially actual filings our for cause some the factors SEC of that from anticipated differ a tables our news release. presentation non-GAAP which measures, to This are explained attached also includes in the financial Vice Chairman The participants and Lamach, President on and Carter, Sue Mike CFO. today's CEO, Senior call and are I’ll and four, it slide to go please that, Mike. to turn With over

Mike Lamach

Thanks, thanks to today. Zac, everyone and for us joining

next held Please As the strategy, to Analyst I at any and been number I've long-term go Ingersoll-Rand's four. our returns CEO. by microtrends really morning said of of time several a other I'd of that bullish any reviewing directly the deliver more in times position my and move to pluses season, midst XXXX, years and since of larger that fundamental to tenure of the for we elements execute sight trends as to on shareholder strategy our I've May to slide in about Day strong am drive the to quarterly business shareholders. and start like busy value easy to in minuses fundamental lose our it's earnings picture this because over

the services exponential energy gas We and energy-efficient most innovation on we digital brands excel investment sustain at food and our natural as resources, markets a businesses global energy healthy in that such transport greenhouse and deliver for through of reduce maintain leading leadership growth highlight growth other resource We and our and megatrends constraints profitable technologies. around virtually focus every we and maintain positions product which to by In one every two It's which to world. strategic or and continued environmentally-friendly reducing to to We XX markets reducing preserving industrial, number the underlying we new and buildings, products enabled are efforts, be the our in our waste, in durable products approximately level major important underpinned continue reliable available, to and and XXXX, emissions, First, launching we in in productivity by throughout to with efficiency participate. which in invest delivering team continue depth compete. superior objectives generating the demand product number nearly major and homes, portfolio to customers. market dramatically category delivering sustainability world. need the breadth

our new This perishable owners. without digital course for introduced Club control off taking Connect, goods. standard their competitive We the that experience Car with fleets mobile apps, assets creates month, we removing golfers digital management and ultimately value traceable, more and with continue TracKing, to strengthen and customers customers capabilities asset Thermo launched We make King's remote strengthens [ph] connectivity, achieving the the roads, car through predictable efficiencies. and the gathering, system and creating available first enhance their best-in-class data advantage. and technologies Tempo This

We and requirements. decisions. reduce that purchase portfolio Technologies we GO of of efficiency XXXX, service Compression In of latest a regulatory the water-cooled more market products, demand. make These to buildings. commercial closure operating month, a we'll in XXXX Trane chiller and customer products are expand meet the existing coverage growing requirements we This for and them centrifugal Agility, refrigerants has for our such the doubled environment significantly the new warming global the residential This use introduced significantly the lead in retrofitting also with breakthrough EcoWise increase to alone, compressors low potential coolant ahead next-generation and size to help connection product compromising technology Trane products our for our digital HVAC addition informed as of offerings. our in meet contact applied portfolio, regulatory performance. resulted with continued consumers In strengthen [ph] on XX% the expand impact of In XXXX consumers. ideal line rate EcoWise we our to without

On the offerings be services side, rotary adding North remote equipment to connectivity oil-free across America. we'll service and

customer intention exciting innovation as we of of no problems slowing pipeline Our that down. have ever, solves and is as complex

delivering at and operating Second, our business cash business free margins through over to is incremental system designed the our model flow strong line excel top long-term.

high flow free Our cash it strategy. generate business income. adjusted enables to fuels billion, business XXXX, us flow cash levels was everything In dynamic us consistently system our deliver enabled free our $X.X of allocation of operating net XXX% do, which which and operating to of system we underpins capital

in While we penetrating than China and of our number underserved in during a objectives, the markets leverage business Climate in success headwinds pronounced below HVAC had our more including we overcame historical we persistent rising and long-term anticipated. inflation, XXXX,

with and to our expect segment strategic and technologies. channels dynamic and and in key allocation partnerships We beyond. return in and historical leverage investments was organic to healthy balanced capital and innovation, levels XXXX XXXX Climate new acquisitions

shares. term. We finally, and years we've high-performance a experienced years to ability long why also an next divided in management few for continued the results confidence to been provides year, into during about the me our and never substantially the excited deliver repurchased over over over so our billion increase outstanding hope this I built insight strong I've $X And which of culture consistently the team Ingersoll-Rand. gives the further

shareholder We returns forward. are to well-positioned strong extremely deliver going

of when the back our made exceeded full-year turning We and in flow. or end XXXX, five, on to we range guidance. XXXX, financial revenue and slide XXXX free the the exceeded to core EPS, top January, we growth, gave commitments we met cash adjusted attention the our Moving metrics;

on our operating delivered against commitments, share end capital range adjusted We Importantly, $X.X lower deploying between guidance dividends, acquisitions. buybacks, also allocation the billion we our and margins. met of

over improved in XXXX spend XXXX. turn we Sue? our quarter more to through to presentation as I'd and As our to provide delivering it on margin a now leverage is this Sue us. for for market focus we'll area the and guidance of move the like path key outlook operating time discussing details to And

Sue Carter

Thank with summary Please slide six. to Mike. today's begin of points go to a takeaway to from main you, like number I'd call.

delivered earnings As period. in to in XXXX Mike businesses. all year-ago discussed, drove both with Industrial segment we and helped solid and free delivered the of earnings our or cash bookings quarter financial three net versus high of strong income. share fourth billion XX% in growth of an operating drive per results segments. increase the low-teens adjusted quality adjusted was which growth We flow industrial bookings Climate the Industrial $X.X we revenue XXX% and Organic In $X.XX,

growth the past revenue quarter We also the delivered three strongest of years. organic

business improvements in make the operating continues Additionally, its performance. overall to steady

solid HVAC, was On in in Latin also all and the our Climate side, low-teens North broad-based was single high of booking X%, America Commercial with and in other Climate organic growth revenue for regions, digits were strong, except all up across growth up growth Organic America. businesses.

continues digits ahead Organic Club improvement points in Our low-teens to of its basis revenues X% operating Products. our in revenue with on and adjusted Car expectations, low were XXX growth. of business Industrial single in up Industrial operational Technology organic margins Compressor performance and strengthen

calculated for balanced in approximately an and We offset deployed and our material fourth headwinds to increased commitments Please robust continued productivity, on earnings January our our our price commitment or deployed during seven. of in value. delivered a results intrinsic for strategic over focused $X eight. also consistent investors announced year, buybacks we points, channel improvement we've of to adjusted to of which and inflation. increase operating Please to from volume, positive guidance business shares two Strong cost date, operating million with trade as to in XX%. $XXX delivered our below allocation performance. growing the quarter. the X%, slide value-accretive the of us also deployed dividends, into long-term. and XXXX. acquisitions, per divided the laid revenue We XXXX. XX.X% technology share enabled by more while slide was drive go billion We we on Importantly, basis million $XXX out capital To of growth in entered business we the order solid meeting share maintaining dividend commitments and system in than gains margin financial of strategy XX January adjusted growth Organic in execution number of go year-over-year The organic number the underpinned strong

while three low high up single high in over it low-teens, the digits. single order were bookings America in broad-based businesses. growth North and in Commercial up Commercial nearly fastest growth years, HVAC HVAC grew digits. single digits, enterprise was In bookings with were grew Asia fact, the organic EMEA for all

prepared Fluid single Vehicles investments services, points positive by growth and the netting netting the from in mix and to Management, In products We by and our in gains up diversity volume, HVAC. growth and by more offset includes organic EMEA. end equipment international Please to XX. digits, APUs, modest weakness continued single Industrial mid in single North both Regionally, impact business Small mid QX North of other operating in countries the primarily third in to a its in Electric but America penetration in offset XX%, X% a quarter partially XX. digits section in our adjusted our EMEA, Latin Please up North single and enterprise. improved China basically in penetrating strong was remarks. trailer offset up in America, was air, in organic Pacific truck, Asia, where and and business orders. growth total segment America, region. softer low-teens business strong, bookings nine, Our in some modestly in margin market were revenues margin in Asia, go Products, slide Compression success discussed Industrial basis in and discussing our price, our the low-teens. in low Technologies on nearly to mix slide demonstrate which Transport gains time lower businesses. markets parts go by strong Handling continued markets digits posted material were services. and slide spend aftermarket Material China the posting growth our and high low-teens These underserved Europe, were in low-teens and Asia three Asia up business. the revenue of America transport strong flat Overall, our of Climate high Please productivity towards inflation, number single-digit in for Topics North go our digits America, resiliency, growth with expected Interest business we'll market, XX the up in of all North and America China America, strategy businesses, and Latin decline improvements, call, softness was offset driven underserved all up number and Tools, rate

broad-based Our in Operating inflation Climate mix from material across impacted segment underserved were go Please business. to XX. by the margins primarily strong of slide revenue delivered markets business and growth our China.

previously to X% continues across fourth operating in steadily quarter, segment and business In of noted, delivered board. operating low-teens XXX Industrial growth. the points bookings our improve basis the expansion, As organic growth, revenue performance adjusted the margin organic

deliver operating nicely continued continue execution on our Please lever system a industrial strategy slide allow business is of Strong free go to to markets the industrial and our the improve. Our resilient gradually to fundamental focus flow. business as more continues of which up stronger, cash improving operations should making XX. powerful business us the

our to of retain at optionality priority our also markets against returns. accretive strong us to investments XXXX, channel go us continued out sheet in longstanding to in executed allocation it and business retain extend employing shareholder balance We we to We continue as a that support shareholders. executed strong improved We on-time slide earnings, long-term and best commitments long-term that meet strong, their further the our We flow with growing earns the our execute made customer continue returns. and businesses. where challenges. delivered value help beginning made including against commitment Please a maintained against to delivered maintained market as most the sheet growth evolve. balance commitments solve and cash capital delivery manage technology working our value maintain balanced healthy markets level the for we plan to credit rating. In in to drive and enabled provides We and to strategic inventory balanced to expenditures capital XXXX, the leadership XX. levels capital technology, having investments free product, We It a our and allocation in complex invest and capital capital a which us a billion and of customers dividend. enabled to right optionality reliable, and of acquisition evolve BBB year $X.X to grow innovation our

dividend of raised also the is of XX.X% rate We earnings the which ahead growth.

Additionally, below their as we repurchases on shares intrinsic value. to the billion share approximately $X deployed trade continue

As are forward beyond, thinking be XXXX want we very look how to allocation. we clear about we and about capital to

committed cash strategy to consistently to capital investment allocation excess a dynamic are return opportunities. We the that best deploys on

Our overarching and priorities that and strategy just as XXXX. same remain executed I the in outlined we

a good our and to for balance sheet add cash optionality, anticipate foreseeable we have balance a and strong need sheet We future. the don’t to

investments, that raising dividend, RIO the ahead making acquisitions. to and We to opportunities are that in the about business, the deploy to slide value XX. capital accretive excess repurchasing best investment shares, or Please be the are the excited whether go future

take me of assets we Act. tax the of XX% tax largely rate. prior the impact Cuts impacts booked liabilities and basis. revaluing through We benefit a new non-cash and discuss the our to deferred December, at of reform versus P&L U.S. rate a in In on provisional U.S. from the Tax Let the moment booked Jobs the XX%

liability a million, booked over the next approximately years. tax also which We payable for of repatriation eight $XXX is

tax booked tables release. a are reform few related press with other in presented the in all the also QX. And and We entries other entries tax non-GAAP

structure We our have efficient to years. access through many our had cash tax for

and business and products efficient sustainable in cash our repurchases. competitive dividend shareholders cash returned have energy our utilized to and our have invest and in growing to share through We

repatriation our cash actual XX% Our be of is expected between XX% to cash and year-end balance.

North our slide utilize in Overall, efficient our in a to a like to tends our with where positive With our annuity rates end are efficiency the to megatrend low North more expecting is than equipment a global growth point markets. continue our market I would strategic global backdrop future. economic economic helping America, energy majority will nature expecting activity around to number Please America trend of some positive where and this remain in go new XXs. the business commercial XX. we conversation was be And building portfolio business the in on had services of indicators of core and XXXX. and in momentum recurring continuation what residential and HVAC tax guidance from tax begin our are the of setup to such XXXX. sustainability, structure stable We these color generally which commercial projected economic positive. we things see looks approximately associated product we And a our market and would parts put-in-place we focused good starts. in digit majority in like expected The In And provide a half growth are throughout the and XXXX to XXXX. for markets. of with stream mid-single

for have and new connected strong approximately residential you growth units market. our remains efficiency the quarter, retrofits and upgrades and of had demand diagnostics. the equipment, this can the sales bookings from in to make buildings energy market replacement savings from controls, see healthy. And total XX% also In energy the capture We up to fourth as for market,

in construction North to XXXX. and expected commercial EMEA continuing strong be to slightly. to and markets quite to America, are HVAC not Asia up expect Outside see in replacement expected flat new growth with both We of be

markets aftermarket up We expected in for be teens XXXX. compared low flat to in units, to the Europe to up power be on expected in to expected be America and auxiliary declines to and single-digits. are Transport Low parts. and trucks, be in trailers growth market. trailers growth expect Latin are North America Americas sales Transport container roughly truck marine is by bottoming based the markets offset of

remain cent in stabilizes This and low growth we cycle densely markets show our optimistic to and which global large The about in markets. started Global generally improved due markets market continue the expect to with up long in and a generally in of XXXX. tend be long as vehicles a in XXXX. XX industrial to vehicles we transport cycle around expectations, show to in continued in The gradually energy the to expand. XXXX teens steady during industrial getting up was last to improve improvement and cycle ahead and continues high and populated expect modest solid Asia-Pacific heavy challenges to flat roughly economy time modestly and fourth utility industry orders have opportunity in cities. Golf had of order food cautiously improve of combined momentum year, These bookings per teens cycle significant industrial quarter, North stabilization XXXX markets months. to fresh initial the in continue America and in CapEx Large We were encouraging. to XXXX. are expected slightly demand modest growth our in is across short XX the Europe consumer to We budgets compressor improvement up businesses. Asia and continued expect globe. business

to vehicles vehicle grow continues consumer also have good XXXX. clip. expected a nice And in growth utility to Our at are

remain We roughly flat. expect market golf the to

in diversified portfolio in out, residential are mid-single forecasting Letting this mid-single in we growth and commercial total, from digit HVAC, in growth digit digit all HVAC low-single growth transport. our

through XXXX up the business up electric XX. digits mid-single will be business and a walking fluid our expected be power our spend you I technologies mid-single minutes Small compression to Please the including details products digits. handling, guidance. slide material our industrial businesses management expect We overall. few to to and go tools, for are vehicles

reported segments in with X% positively reported contemplates previous revenue organic percentage difference between positive backdrop about slide, to X revenues our point to on contributing. from point acquisitions. we XXXX XXXX be the of the percentage both and foreign up The expect exchange total about X discussed Given and X.X%

enterprise, the price, see midpoint expansion for volumes, go of to of margin slide productivity For and of than we and XX. At material see our from expect inflation. enterprise. offsetting productivity approximately more basis would the other the to improved points higher continued guidance, to XX high solid leverage levels we expect material Please

for $X of We expect share range to per $X.XX earnings restructuring. adjusted the of be excluding in continuing to $X.XX, XXXX about

share translates in repurchases approximately which diluted XXXX. We for $XXX million have million into approximately guidance, our XXX modeled into

to allocation that we of and on excess deploys the where As the the coming quarters. are allocation excess depend time. consistently committed balanced I capital see outlined over dynamic Net earlier, actual cash cash we highest opportunities ROI over will

flow between equal the greater Our tax we XX% tax XX% be including target is bottom This U.S. prior and puts of cash a after the impacts so XXXX to net result December is for estimated is of not than anticipated tax income. consistent for Ingersoll-Rand. change to is XXX% line The legislation. rate, free structural or expecting rate takes, our with long-term our that are and

also expected are are million. driven $XXX consolidation purposes, factory the be to be and Capital we million expenditures initiatives. modeling expected Corporate localization in million, approximately primarily guidance. XXXX, For to offer approximately up from following expenses approximately $XXX $XXX by

key like to and investor over I'd close turn a to the back points. of to topics cover with key to interest, of Now summary call Mike

Mike Lamach

focus who we Please slide to most then in prepared improve Thanks quick our to of many discussing wrap section. ahead of help the the us to you do go open interest the remarks up call, before a of issues received matter you feedback to the Thanks, questions. balance we’ve the for of I'm all summary that XX. our topics floor to you Sue. the from spend on and going of provided

our I’ll strategy. topic a is investors. of of topics that cover garnered lot have the one first It's interest from The China

in So expected we detail want going time spend some strategy to forward. impact more providing and

China is in we first we've X Tier First, X been as strategy market. strategy it's implementing and and markets important proven space cities Tier to entered in the applied successfully note that X a our the for Tier

This our a support. sales an system network customers willing our past innovation, of particularly in the improve value than to any versus equation, total Margins XXXX would vertical strategy a This the margins. infrastructure and negative ownership selling and total months. impact half most ownership the equipment by commodity. very the a mature price using to product we for for which versus and doing the force which we conservation, become are at reductions. other to compete way a deploy, for XXXX. or is us, Our design, rapidly XX the to basis has the and spread resulted market the systems sales entrance further direct differentiated service long-term gas underserved we undifferentiated comes has value impact greenhouse markets quality, been product market would cost they price are fundamentally of the markets, enter cost total applied opportunity of We the the investments accelerated in takes to rewarded landscape of for to sees inflation whereby basis do is we've as service you geographic versus been are terms in in our compounded grow the talented in energy material primarily region. markets in investments. with way cost and has sell of in the an proposition transform new reliability, Once the with mix customer value has technology of by impact enhances emission we on unique experience which and aim cost been these It's advantaged people, into where and With is our and negative service strategy more business, The material for. total persistent material successful pay as

the the the important in it's mix end and shift in strategy, impact So from game. temporary China, the to our long-term understand

things few to We expect in a XXXX. improve

year. First, pricing should improve in move the these we markets through as

lap we XXXX we inflationary a as expect to less begin inflation. in Second, XXXX environment

China should investments strategy we infrastructure our markets believe these completed lastly, complete versus a of XXXX. investment to And largely in growing necessary in less become are XXXX. on execution services which Third, headwind for our focused We the should mix of we've stated, the years to to build help to enhance XXXX, investments here our reason Please EPS go in expect come. be accretive future margins. shareholder we and value In believe slide summary, XX. for will

expect P&L leverage XXXX, factors. improved on number through to we deliver the based operating at Looking a of

First, health to growth we the markets, Sue expect core drive detailed based profitable on continued of our volume earlier. as

We to many price pricing in price had of versus versus In already and of approximately through price to XXXX, equation. material parts have increases spread also a XXXX, XXXX put our expect points. see our higher should basis cover in XX improve expected inflation inflation which we versus cost business material negative

GAAP in considerably, We expect would a be this in narrow tailwind XXXX. to itself of and margins of which

continue and which driver an our productivity business important through of other operating is the drive improvement Additionally, margin P&L, material to in we always system.

inflation component positive productivity XX Looking positive a would had of We driven, cost versus bridge. our XXXX. of which we've with productivity basis we've a points is at XXXX, similar the positive material material and expect performance price in the seen, combined spread in

in wanted we performance and for as The in headwinds out. to in our we our past, demand increasing XXXX deliver XX. slide our it key year. a mix will profitability the good And we to material go Please of at higher vehicles. electric bottom business our out small close engineered-to-order to include our this and see interest levels topic and prepared our China reduction we so fluid technology, has handling see bears strategy, consumer, management, is Thermo Additionally, our a as higher-margin This remarks lastly, to been the tools, analyst day, significantly detailed earlier. with as that from compressor golf continued line products, from discussed opportunity along large in resilient, King is of shift I

in achieved XXXX, the the in relatively flat maintained a at North low-single-digit trailer market margins for decline, King of During revenues Thermo business increase American same we and time. the the face total we

auxiliary and Asia. particular in power with truck, diversification results, Our aftermarket, regional growth with in worldwide yielded strength units, strategy

Looking across performance at XX. go business. XXXX, we're similar to the Please expecting slide

January, with $XXX JV a the sales venture countries. spent and select or Once million air-conditioning regulatory approval. JV which marketing, Mitsubishi In mini-split, systems past Electric, distribution strategic and As completed, multi-split, partnerships. pending and joint variable variable previously the our discussed, in support, or Latin acquisitions in we approximately American on the months flow, speed will have committed announced XX include heating over new we is refrigerant U.S.

our temperature-controlled also ICS We Energy. services fit strong of temporary Cool business, our growth for and Energy With Western a European with rental businesses of HVAC processes. of installs, high-performance acquisition Energy also types ICS all announced Cool and expands the industrial strengthens systems Cool ICS channel is markets, in our and HVAC sells, our sales Western key service one largest Europe. in plans.

my tenure am CEO excited future prospects in Turning in is well-positioned to about years. as over where slide XX, more been I The several deliver to the than strong I'll close our prepared remarks right next company Ingersoll-Rand returns I extremely began. now. never I've shareholder the

positions profitably, operational consistent high-priority, attractive We and heavily balanced that was a and for megatrends been XXXX of have ROI experienced and example. share We've end firmly across as high-performing of significant leadership value-accretive trade a advance markets enable to over including and management we brands are committed market value. deployment excellence to balanced culture to M&A, a of a strong number is to the in good dividend, are to repurchases the its deploying our below we growth. franchise growing that investment had to team deployment intrinsic strategy lastly, and years. track execution capital efficiency cash of stock high investing and areas, profitable do. excess continues into sustainability. business, we build such a energy as strong supported growing Our to And shareholders breathes dynamic the capital, tied everything by and We've global and years healthy record

forward, and I will same, with take and is these or happy capital questions. that, Going be priorities remain the to And to deployment your unchanged. the Sue our commitment excess

Operator

from Winoker UBS. Steve, open. [Operator Instructions] from is Your first your question Steve comes line

Steve Winoker

Thanks, and all. morning good

Mike Lamach

morning, Good Steve.

Sue Carter

Good morning.

Steve Winoker

guidance. just first on Hey,

Just want the in that a the order bookings I and organic to cash flow also industrial the to And the guess growth. between guidance conversion, the help side, organic time X% on on increase. CapEx again to lag delivery understand trending, X% that. are the Obviously free there's X.X% relationship understand but maybe us on

As that are versus things bill that or kind there forcing are are there year? other of prior inventory step-down

Mike Lamach

the do question the would fourth be I'll larger which still bookings came first and some the and shipments mark. a timing exact late the the of Steve, one, quarter, of in so compressor applied

whether that's or we the a bookings the and surprise were TBD, year. that 'XX throughout a year. the we'll would So it's about thought much year. stronger, But into quarter 'XX update at end really going that were up XX% of we from definitely first was the of fourth Backlogs where be the quarter delivery and

we'll And year. So the CapEx? into update Sue, as shipments we go on further

Sue Carter

so, we million about CapEx, you we as guidance came $XXX the $XXX for at look about Yes, gave started XXXX. in Steve, million, we on guided it, at XXXX so $XXX. we we When out

going over we other XXXX XXXX. words, million didn’t in spend into really that to in move $XX was So CapEx that we're

of amount slight just So you have increase. a

factories. increasing and going the is reduction other you It's be be going that with cost would the associated is in factories new when about that, for to The million to $XXX The thing -- productivity on our increasing it's ideas introductions. primarily I think product going $XXX say million. to capital

growing primary leverage. So margin operating clear objectives, are when think them, operating and you those our with very about

for that is $XXX a think of So capital million good we that XXXX. use

Steve Winoker

all we're you thoughts guys stepping of seeing might Any Do investments But Mike, higher getting at these at intense very over front, changes and apparently up a share clearly of that et this made, And on back pricing, we run some Okay. product you've time go to more competitive other impact the forward see actually that introduction development stepping aggressively environment cetera? in own their their channel more the number level, and environment on HVAC aggressively. up own the all? introductions, broader you how took that you've the product competitors ahead particularly if just the now over of a timeframe.

Mike Lamach

to year now back. we've to we've years. consistent is investment over hard pounding that level It's one good just through But been back it's a of been the thanks. every ROIC seems time look It about that on long look thing nine Steve, projects. like

We 'XX. those pipeline the capital introductions, As looks and XX areas, lot mentioned, stepping up solid. more planned a for had on of Sue innovation in

So I as the And think gap we we're large do are there have in that competitors the and a marketplace. known out putting we've we've got positive in that capable well. always systems technologies out that

keep moving and innovation So continue we in drumbeat out front. intend to the just to keep

is at competition and know we that where like. would to to current So I time. technology be relative our some pipeline maintain for we imagine the launches, going positive looks gap what And able know to we're

Steve Winoker

Good Thanks. luck. great. Okay,

Operator

from And your question next comes from line is your Jeff Sprague open. Research. Jeff, Vertical

Jeff Sprague

everyone. of day I could. you. things a had on Thank Good couple just outlook. just Also, Mike, the if I sales

tone seems particular look of anything exiting pause You question some it like given in way you the top for in that or same orders Climate you're the about there forward it also here. has Is XXXX? the in line gives addressed Industrial, the Climate the

Mike Lamach

pause, just there? me to referring you're tell you say some what Jeff, when

Jeff Sprague

Well, maybe business I'm organic just seem at to for we support XXXX. X% looking the in that than order growth rates more

Mike Lamach

need thing in the 'XX whether 'XX. I is we're mean quarter at in them. timing come first Jeff, exactly don’t these bookings trying time this fourth the when to the large and assess customers late Yes, of we in year, very are really know, or to really and it's quarter, And going point

guidance clearly predict. to mean large the These is understand a given. more projects through carrying time So little the lead, it's difficult we've XX% timing. thing longer a just backlog work that we exact revenue year-over-year great to need are to to I that relative increased

Jeff Sprague

elaborate little increase your mix plays price in happening it a is could initiatives you that of in Does bit, on on Mike, to And color just confidence a that off? that's outright price better reflect something just the how the there little understand the business, China XXXX. or

Mike Lamach

Climate throughout throughout price the Yes, Climate in the particular. in so been including year XXXX, of back-half globally we've increasing Jeff,

ways And XXXX. priced because coming shipment in so to we've pricing I'm confident those that through projects some increases, in

competitive think rise in as would in prices I there well. dynamics to point China

that's felt there are I by been all that has recovering commodities markets So think competition. been in something

on marketplace. commodity happening, I pricing in what's early seeing pretty coming handle through you're in at And we've good got the think a from So perspective. year a least the

going that then first-half is mean first certainly Beginning a the not quarter, closes, like I really gap the and frankly the China. I and throughout So to a across all. close gap company in not second-half the it's feel It's year. stick equation. hockey at

frankly is through linear for us. think I the fairly the year leverage that

Jeff Sprague

for I nuance territorial one comment? quick of before although some other or you cash was so if on you're a stranded, of some pulling are just you're suggesting that repatriating that in or And that XX% was could, system now your and a Sue, your cash, XX% back there Irish

Sue Carter

We've that structure, the there What under we access entities really No, our into the of up is comment, U.S. the repatriation next intercompany Jeff. international and the through that so tax as some to roll is, cash our entities use to small pay U.S., U.S.. previously the report a in that going that where to of had back nuance eight over cash years was the and no loans we're the mechanisms. through tax the other portion to reform to going and bring

have of only so that this big calculate And a $XXX million. cash you that the really did did obviously to or roughly that have reason is not can repatriation. not the lot signal about is we a part we to of was And access

that you et amount doing it's through what rules figured to trying And in-country of that, doing with tax of out the are, to have reason give would of approximation about go the be. is context just the So was on go that detailed we've an amount how we timing you what would cetera. now the works I all the

So it much of nuance than an to cash back idea how you the U.S.. give was to more nothing come a would

Jeff Sprague

you. Thank Great.

Operator

Your next Steve, your open. question JPMorgan. is Tusa line from comes from Steve

Steve Tusa

guys, good morning. Hi

Mike Lamach

Good Steve. morning,

Steve Tusa

what company? just bit just you little kind you're the the color give year-over-year, roughly guide price us for here of on of in Can assuming a

Mike Lamach

tell around operating I'd how the to point positive you -- really I'd target we changes system off that company and spread think Steve Yes, basis a of start trying by inflation. get XX-XX material saying the about that nothing

all of the as in if essentially place be price that and plans, still achieve productivity that. be material able and inflation. to a you to are the basis midpoint about in guidance. plans contingency able And could relatively set we've We've even you incentive thought ideas negative internal motion or the set and on handle, being of a to the year will, all terms flat in So, achieve XX say,

with minus really XX roughly set XX is zero we're of kind think how a spread for plus would at So about that. I

Steve Tusa

again, And not clear assuming that, to on right? you're price Okay. the you're offset assuming to just price, be some flat commodity,

Mike Lamach

on and Those so absolutely that, absolutely productivity there's that that top on absolutely material priced, of priced. of

Steve Tusa

that material course? of of you copper that front, Is has aluminum most is that I design? or at product tackling some run ahead kind on guys just is of or that blocking game of to kind productivity, from resi know of the least, around were coming in its and already it

Mike Lamach

actually another as a used. quantity be program That change, be you driver. the preferred and number so so product would well. things, Material Material but would a And of as then of supplier helps. material supplier design to consolidation one. usage, there'd be the No, gauge mentioned, it's

productivity will So, all material that number. of a to contribute

Steve Tusa

in And sounded well last although full-year. first-half, China mentioned the the remedied press would just then one for Okay. it if with one, pretty that release the as be headwinds in the you you here

I the said XX% first to these level, about with dynamics? on XX%-ish the think XX% high quarter. cost being should mentioned be to different year. a past think just the you've year How any we Should You over of first-half, basically that earnings a price the year of in perspective? about, at the we linear the of seasonality of And the from in think in I as think kind course you're the going seasonality

Mike Lamach

Sequentially, pricing first cost dramatically. improves material around your we improve on inflation, QX. QX question, It to really

maybe about we in something would be about would that think could You be that. XX terms points of basis thinking

QX think an immediate of point I there's view. So QX to improvement from that

think As it relates the to seasonality, you're right. I

end go or toward tell the lower of I as you this say, least way initially average four that you over it the just got flows it price back XX.X%. around that that five-year we've would you our through would inflation, should. relates it all it to sure XX.X% contained If making I that and to to guiding runs, be at

clearly we're the we're is good for proof we what and understand fully So on doing, we first the quarter, feel but about of prepared so burden that.

Steve Tusa

guys smartly low for stretch. keeping kudos and you you a set guys it, not past to seeming reasonable Yes, well in bar to and beat here so things have the

answers. the for thanks So

Operator

is from open. next line Andrew Your Citigroup. Kaplowitz from question your Andrew, comes

Andrew Kaplowitz

morning, Good guys.

Mike Lamach

Hi, Andy.

Sue Carter

Good morning.

Andrew Kaplowitz

talked that And you're in like having pickup markets. from accelerated you you can bookings past applied North American versus differences in again easier Was any see it commercial Mike, just talk hurricane-related into HVAC about markets? the comparison, the about you've looks unitary good did any work, visibility in quarter. and seeing

Mike Lamach

-- strong. for was us quarter last in 'XX really year was Remember, and X

tough so So to change quarter back-to-back of have projects move that that not 'XX They're a at no 'XX are stack and planned with something is dramatically that, But the and healthy work other changed combined we strong off in awarding, we I all visibility 'XX. The would from than us. comps, really point comp for design booked comp, of specify, create of this hasn’t longer. and that comp Institutional view. that larger then and there that There's help process tendering, 'XX, customers for really projects we bookings, on an X issues to and much. think through 'XX executing. coming take issue there's there obviously really no that that easy would

that So we tend on have and visibility to continues. that, more

Andrew Kaplowitz

mid-XXs the good only looks guiding you're in helpful. Industrial I in And the look then 'XX. at of if is It you margin was a mentioned income like job doing XQ. Okay, sort the mid-XXs on But margin. team that's to it at

about so. costs a large a of starting know to of a been you've engineered-to-order know talked the of have bit on You taken And lot you drag margins, we compressors out business. ramp, which

of things step have But sort So if of all again, strong incremental in up is 'XX see got wait this it margin way conservatism, how the you've could to they you to growth ramps could? kind just pretty up.

Mike Lamach

good cost volume. through get cost leverage. how variable on the much we really of depends it the come in we year Well, about and fixed how that do feel on the much leverage shipments And

and play the something out confidence is that going business really for we kind outlook front, and year clearly us. the time of confidence 'XX, ahead on that'll around into gave But is of that So 'XX, schedule it well. through great and that performing XXXX ago, this really XXXX, really more some

Andrew Kaplowitz

Thanks, Mike.

Operator

Joe, line Sachs. And comes question next open. Goldman Ritchie is from from your Joe your

Joe Ritchie

Great. Good morning guys.

Mike Lamach

Good morning, Joe.

Joe Ritchie

back price or XX cost plus year. maybe that basis on with Mike, going points minus to this you made commentary

think typically copper you guys the you of inputs, hedge year. ahead major about If the

curious where impact, steel I'd And any like was on year, Chinese be I'd it that. last that's then, to last manageable. lot being, are a we clearly Seems details year. more like today, it, a So call get huge seems negative XX%

positive in year? your so I mind then this what price secondly, some maybe guess biggest first, your And is, to are even my question more factors swing getting And cost details around assumptions. the maybe

Sue Carter

start Joe, XXXX. inflation out material the seeing on let what in me and side we're

and So Tier also there's one, X there's commodities components. X, then other are the that inflationary, obviously Tier

in that to is to also and is out our inflationary After that, see see are the half about call we XX% product what that refrigerants I got in inflation we Car XXXX, of copper, going of going point X to overall inflationary. be it spread aluminum. let's about some Tier We've the steel, be be want inflation down, expect to So will into is inflation. that as break that that led what I commodities between goes and Club

we copper, go forward. as when about do so I And copper lock think we

with any to year. quarter that XX% on XXXX locked. expect the copper just locked for we're enter we're And component. that entering of do be to given But going an XX% So under inflationary we about

happened Joe, when to we performing correct, terms differently also you what than and about and in that prior 'XX, XXXX, globe expect Asia is that in the also see in of what expectations. You're think commodities is

then what i.e., that have take another large capacity in of They've their compared done actually what's steel did before some So offshore, part the inflation using high is pretty see. of for other options And purchases to U.S., having happening things XXXX, offline. kept steel you'd and they normally that. material some not

refrigerant see to the copper, expect steel inflation the the some of year. the out other I components. perhaps do we well of later part in and in as as point aluminum, some also So But

Mike Lamach

think of that XXXX I'd as, than about Joe, it I've the seems inflation more manageable nature before, said us XXXX. and to

little feel do there's we now bit with steel that's the any of that level fact and appropriate appropriately. easier longer that system for right it's got you get at take where of is a And lock to to a unless copper it's Some us at look to view, the trade sort policy more a a again and environment. shocks

nature including So just the refrigerants. profile the easier in maintain, or to the general, where of for is, us inflation bit a is

Joe Ritchie

you're trends and you your got assumptions short-cycle very like look seems the were that at going maybe perspective, just starting good. you it year you're a longer-cycle conservative gears, helpful. remain that's second. from for last you year with spot back switching this When XXXX. than the such just Industrial of mean with a your in I kind it, for Got to better margin year then And clearly a backlog, being performance margin

decent also the comment seems putting your you specifically well like extent are And pricing on around then to a so as increases. it you are pricing on what could these perspective getting that, from and competitors orders, because through

Mike Lamach

industrial factor our less a It's has and Yes, been of really too. productivity has so pricing there been great, been good.

the it, now dealing that it's January. restructuring we're roughly Restructuring good really price, and of say, And the in total. there. really two-thirds $XX in Two-thirds geared completed industrial million And it's really of call about early area. is in the more doing climate material 'XX, that positive. in all let's you're on inflation So been That's side. predictable it's is than bit with a

a opportunity paybacks say I'd So really the an there's But course complete, there's look flow risk of opportunity thinking more and there's opportunity us to to do perhaps like about for the the better. through year, there when an an there. there's there. what during than like how might that'll maybe to

being the margins early got we that toward we've requirements optimistic happened productivity have and that fact and bookings the with about start an 'XX what's ahead 'XX need with So really to happened schedule, there, in I'm what's of the there.

Joe Ritchie

Got count can ending it. in, If I year? the one for share more sneak Sue,

Sue Carter

For XXXX?

Joe Ritchie

XXXX?

Sue Carter

XXXX, the was average shares about XXX. diluted

Joe Ritchie

average. Okay,

for ending was what XX-XX? So

Mike Lamach

back find grab Joe, another we'll call. come We'll the number and… and

Sue Carter

know of the don’t head. top I my Yes, off

Mike Lamach

- another question.

Joe Ritchie

Okay. Thanks, guys.

Operator

from Your Wells next open. question Rich, line from your Rich Fargo. comes Kwas is

Rich Kwas

bit? or three you Mike, projects a those come talked the that in forecast couple Hi, out about institutional that online everyone. embedded you've pushed thought 'XX. revenue good in are morning on a Is projects could or

Mike Lamach

No, they're some had and to forecast. are ‘XX They but going be That upside mean they to multi-year forecast, too in not done, in in the the really forecast. big the if of I not. would are They're projects. throw they they ‘XX but be ‘XX delivered to the ‘XX. in be going are number

Rich Kwas

all in can And then M&A, done right. Okay, contributing with the there number ‘XX, about on the stuff regards EPS profit is to number we or think guide?

Sue Carter

Rich, here’s the at how M&A. we Yes, look

we point one So revenue. about would of about it talk it, be

$X.XX factoring to EPS EBITDA We to increase. to increasing in in mid $X.XX $X.XX teens about also are about on would in XXXX those, equate XXXX which and

Mike Lamach

a of up, teens step but is sort difference the just in businesses. ‘XX really closer to good in really EBITDA the higher XX, An

Rich Kwas

are -- maturing I the to a pretty but high at like your that’s refi high this kind factored that, guide, would able And not okay. ‘XX. refi-ing that Right, in around assume on if relatively that’s last thoughts point? that at then, some one attractive you into cost be cost rate of you have

Sue Carter

exactly That’s right.

August is in come So, to notes due XXXX. that intention the XXXX refinance our

correct, rates this than at that much are it’s You are at lower obviously also X.XX%. And point.

So, to we refinance. do intend

also and that but we refinance making got there, are intend break the sure any conscious being early and market mix We do on those. premiums to watching we have the right very

Rich Kwas

Okay, Thank you. great.

Operator

comes Raso your David question from Evercore line from next ISI. David, Your is open.

David Raso

Good morning.

think Can to post-China price at cost, half a then, we be quarter turning us -- some see since as third is your of sell Is are base case back kind for least the it given XQ I hasn’t there that sense of as we about? the How give been case you a or cadence? suspect quarter, XQ ‘XX the within positive as it’s ‘XX. up seeing the coming But, it through? base year-over-year guidance. On more that a on first that And table the even positive of again. for you soon quarter

Mike Lamach

Dave, that in for Yes, that basis would full sequentially gets quarter the one four, I XXX relationship. flat. better negative mentioned, be a points quarter Quarter it’s year one, still

third, imply sort fourth it improving. does of second, So, quarter

cost You that pricing were hopefully and as will see in balance on of QX, number. inflationary we that improve throughout already the the a have QX, the year shipments handle got made established QX, and material

sequentially year. So, throughout get better the they

David Raso

so XQ just understand comfort so bps. improvement XQ is XQ, And the get from bps with XX to basically we XX down

the price this You cost what’s XX, thinking of in much of improvement it on and much your quarter are happening is backlog? first start to of year-to-date or and sort what price are China, it call how you is that seeing you how actions year took

Mike Lamach

experience improved Middle Well, somewhat with above, China. the is can of the in the East XX% you under is world. we the would being as highlighted here as of it’s as you we East. all and marketplace the element to And material now it’s environment our so China the the China proportionally part really whole that. now And throw about far. better it’s Pricing you but better that been assume the relationship with that’s a and control of the price earlier, there, if that Middle we have tell felt closer XX% with China, rationalized the I capacity rest of feel at in cost And getting really in say inflation throughout we year

David Raso

sort have cost." We that to deteriorating, but something improvement still a that. to, is So trying of And is of positive are derivative bps, bps it bps. XX XX getting start I little that’s your I the will bit, is on much credence bps, how just "Hey, why if push again quarter maybe significant, can gone not see backlog comment we line much domestically? understand XX side bps, develop. that you today Even have first And price now I to second mean am think improvement from exactly some of XX it… of to worst how the add right? in it’s the to

Mike Lamach

Of sure. course,

David Raso

have today coming orders a the in with better cost. price so -

Mike Lamach

space, commercial one, already quarter a booked. we we’ve shipping in what Yes, are

turn. scenario book is price we it’s in book this with So, prices. the established dealt is there’s pretty feel by at typically turn, list where well like point. But There in

the which it’s product, unitary Well, quoted unitary than to in quarter, going going more about is talking and to applied specific competitors. price So third The applied project was our fourth shipping second quarter, increases the as going then list be quarter. through have project had and very first price did specific.

David Raso

seeing Yes, realization the it just to market seems the is a start that of bit little unitary year. price

Mike Lamach

Yes.

David Raso

already said booked. And the is applied been as you

like feel a guesstimate. had I seems it has first China is see doing sure full channel, make price you No right. to improvement. of the There fields something assumption? here doubt So line XQ hopefully unitary the XX you sight That’s apply that’s fake but have I the be line second of this sight, good But the we wildcard. for am it's like just looks clearly really framework should mean given a bps, in versus cost trying We like like. to just should a derivative saw, quarter. doesn’t fair what what this have

Mike Lamach

something here. the to my really that here for change months in change in have that Yes, guidance David, the really quarter of couple first to last

David Raso

Okay.

Mike Lamach

what know be that at don’t I And point. this would

David Raso

but real up, orders to America King’s a but be out you at for the seen it’s you see have bit flat ‘XX. -- to some a not you Thermo up any down know better large have trailer domestic Is just Thermo lumpy trailer too a right on are the seeing Just of King Lately, Is to of have North of now lately market. that? quick, -- I for I they domestic, tick year. of backlog kind there hole dig

late? to what of guide have versus trying understand that we Just seen

Mike Lamach

dependent less margin utilizing and really we we around as here. growth trailer, Yes, ACT American just are become the for North data

to on And going it which ACT not ordering from anymore try comes is are than that. customer to to we down who. always So, guess

we it’s are calling predict just the too And this and hard is at saying. they are what but ACT so, down point, reflecting market to

Operator

open. from BMO. And your Tiss Joel, your next comes question is line Joel from

Joel Tiss

bit. way to about a a when market? And to ask there of flexibility just Snuck to guess little the it maybe just structurally I of a running that’s see But, future the headwinds am more initiatives we more thinking sort Is steam out ask changes you on flexibility. in increase to there, kind going wanted about I the is in maybe wanted the little enterprise from thought my the cycle. I are see about the in of some I

Mike Lamach

that steam a idea on we’ve the that productivity losing are there got across Joel, we is the no quick company.

we that has where attacked logistic, In in past. the the fact, we parts the G&A profile hadn’t are attacking Warehousing, of company the cost changed over years.

some on areas. those catching Now we up of are

all I have have will we So the difficult productivity. tell at are here. confidence time have you short in we running all of we the here be got But in steam I areas got. don’t that It about any -- a out not got

Operator

would the I to over now Nagle call turn Zac for closing to back And remarks. like

Zac Nagle

joining everyone and have, to We’ll like take thank around questions to us one would you be the days any think comment also closing I as We for well. make today. in to weeks may coming and that Mike wanted

Mike Lamach

great last the on at We XXXX. This in us. the you you. Joe a over for Ingersoll-Rand have and XXX quarterly of a wife healthy the and people last long XX that your call, calls thank beginning many call Yes, And April known comment. earnings Fimbianti’s Joe. you all years, just from Thank years, you one is wish retirement, with us Joe,

Joe Fimbianti

It’s an Mike. been honor. you, Thank

Zac Nagle

everyone. you Thank

Operator

concludes conference This today's call.

You disconnect. may now