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TT Trane Technologies

Participants
Vik Kini Chief Financial Officer
Vicente Reynal Chief Executive Officer
Julian Mitchell Barclays
Mike Halloran Baird
Jeff Sprague Vertical Research
Andy Kaplowitz Citi
Nicole DeBlase Deutsche Bank
Josh Pokrzywinski Morgan Stanley
Joe Ritchie Goldman Sachs
Nigel Coe Wolfe Research
Rob Wertheimer Melius Research
David Raso Evercore ISI
John Walsh Credit Suisse
Call transcript
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Operator

Good morning and welcome to the Ingersoll-Rand Q2 2020 Earnings Conference Call. My name is Megan and I will be your operator for the call. The call will begin in a few moments with speaker remarks and then a Q&A session. [Operator Instructions] I would like to introduce Vik Kini.

You may begin your conference.

Vik Kini

you. Thank the quarter to call. XXXX Ingersoll-Rand welcome earnings second And and Chief today Officer. I'm Ingersoll-Rand's, Officer with Executive Vik Kini, Chief Financial me Reynal, are Vicente

earnings available on supplemental Investor and Relations referenced issued our which the the which website, of www.irco.com. during both will be Our a are call, section release was presentation, yesterday

of replay a call addition, morning's conference will be In this available later today.

call risks are I would our filings, that provided uncertainties on with this everyone subject in like certain and the call. nature the remind started, are to get previous in we which and read Before discussed you information to forward-looking in this statements SEC on should conjunction

Commission details Form XXXX, report on and annual these on the refer please Form report X-K more filed XX-K to exchange Xst, the on with our May with commission on our on website. Exchange our For filed securities which current risks, and available are Securities

forward X are regarding included disclosure statements slide on looking Additional presentation. the of

today's refer in we addition, will non-GAAP to financial remarks, In measures. certain

You in Relations a and with on are Investor comparable available accordance most our presented of and in measures measure GAAP these can both to reconciliation slide our release, calculated presentation the in which find website. section our the of

quarter three, today's company the slide second of the as and we current well an will company segment operating provide total on to Turning on our review in the call, highlights. update integration efforts environment as

session. will We with call Q&A a conclude today's

to that Chief each will At for Officer. I we Vicente keep this ask allow participants. over enough one Executive turn a As other to it Reynal, now question for reminder, caller one and time follow-up time,

Vicente Reynal

highly world all by to world. around hard pandemic the and of presented to stepped how The our Ingersoll our I the I strategy Thanks, the and here teams challenges building the will Vik and everyone. safe employees our speaks at continue I'm all that morning extremely company. and of display. start of execute culture keep have our Rand to customers, of work proud around serve unprecedented employees today's has the of dedication communities COVID-XX to on call the This all good thanking we're to up our continue and our communities appreciate

X. the Slide and we're about taking. want more the to culture to some Turning share initiatives I of

Our week We to tools. connect With over whole Ingersoll We permeates values, imperative. drive Rand execution the IRX, over which we're globally and drive company now to purpose communication every help single how excellence mentor life how unique create to content make our we're and leaders this and to open culture and doing on you immediate imperatives to better. lean guides company of announced execution do is is XXX able X,XXX weekly we execution. sessions, strategic our know that a

few point a So highlights out. to

we travel First, teams. create site wanted more individual to our open during no direct this a with and time, dialogue

of So last Q&A halls future are are have that been from owning specific this individual town minutes hour to location. with some one idea. sites spent XX have live employees. just X,XXX our of over I I the with directly to had conversations with meaningful global over three months. and In most interact XX the the employees forms virtual born with on micro These our last able been were These have days,

know apply to having and get fun to virtual as and Second, how values decide our a values day every their they roles. interactive really activation Employees fun the designed sessions. purpose team and in powerful are

inspirational it racial where a company sessions. about to employees lot and for had reflecting spoke safe had to listening Third, Black hosted as we a their employees was on important space create of and openly We attending, we have the recently combined an conversations recognize and sessions emotional and a newly deep responsibility topics. we experiences employees five

and maintain when very everything that and as the took and impact highly Rand, as think including work and of So is place, restructuring the this the has ownership foundation environment, of of to about still a on well able merger the pandemic happened its highly as what mindset streamlining since the organization, culture unity, sense strong at building we're this differentiated. Ingersoll makes we're us you

Moving linked slide executing the safe on update take strategic to X, to how integration thoughtful our want to we're to I a approach a of and imperatives. the in everyone moment company

transaction started strong we even a at is The and of first phase formal end the closed before one building that the foundation. February

driving began we long-term a margins past planning summer employee unified deploying we As we to described few a effectively. major in all the the grant entire as in as in culture of the slide, expanding milestone later after will we that can have be allocating talent, equity Starting come of times accelerated over central also our soon mindset previous create transaction. sustainable I our with central of ownership across this is strategy who capital performance. on quarters, announced This workforce indicated shareholder engagement, seen integration we'll And we areas are. mid-XXXX to and the number foundation a issue and terms when plan our to that the value view first

with been accelerate With able tools, of the reducing cost. on structural help distinct focus our delivery IRX a to have we synergy

we're embed see operating a balance forward. ESG of efforts develop built mindset strategy to sustainability, And disclosure we liquidity. sheet an following as and and very our proactive And the ample taking cadence on we're of finally, a sustainably. transparency on move slide, newest you strong also through embarking have with We will as

many place a having is the pivoting to As growth phase service as the market. which to to on integration given it addressable whether growth, in M&A be where of have our bolt-on inorganic and product large opportunities our initiatives have for $XX designed in organic we penetration; foundation or us Growth will we a drive fronts, organization funnel growth. take billion-plus further we ahead, of next look will transition strong allow

to our integration of phase the lead portfolio to which optimize As optimization. we this is continue the third business, will us

While the adjacent portfolio evaluate assets continue our I is addressable businesses the markets now billion well market the to that just to as of focus improve we our grow us allows to underlying mentioned. within to $XX thoughtfully continue right nature current the will as

Turning of the that to of our believe progress we're strategic making imperative culture wanted about sustainably. must talk that I house. the to which on X, slide And with start points operating experiences. nearest a building starts and embraces at It top various I views, it backgrounds is

have means these few in Board gender addition race, pride. perspectives. experienced point to in of it's years board having be diverse. such levels laser-focused the of want surrounded and a the and diverse, is Our gender, been in and Directors on XX% being XX% last rate best of processes and that a I high diversity We to by strong thought

ESG grown Our us. culture are on also Increased of communities topics our reporting our and on Recently, tonnes found the a leaning impactful Wuxian behind in is year every by This the in website. equivalent this Investor is example can and homes. the of published is determine here has we COX strength solid. the use our and emission be week customers’ why XXX are our report to more taking. will first most that's Wuxian, of already the on which to details China One section More materiality completed electricity energy actions and employees than important. important COVID-XX reduce approximately our are response measures ESG we're X,XXX used plant in on last and facility Relations assessment sustainability by

financial strategies downturn other operating talk to expected given along about putting High-pressure four to segment. Overall, our highlights. performed So sustainably the into the our business with due Solutions to the QX very X revenue page about declines in and the pandemic let's and move execution COVID-XX well talk

pleased points. liquidity. that during will only basis line point from As of focusing flow very they was XX%. turn performance deliver EBITDA year-over-year at synergies they The to the our stand the margins protecting first Vik? focused efforts strong a From This quarter million we was Vik stated $XXX an ultimately revenue. goal in target teams a liquidity company of we we annualized basis walk improved with our cash cash continue short-term team our $XXX But company also XX% I our The quarter results through saw XXX of improvement a also EBITDA last Leverage and as at free the detail. indicated High prior manage billion. ensuring Overall, within what's or managed and points. team now of did The delivered exactly $XXX at on as stayed strong now team, which was cost down $X.X basis a million. structure $XXX total remain million now XXX Solutions adjusted accelerate for well margin the relatively adjusted a Pressure when times. margins on similar the XX to and executed am On basis, adjusted segment, to bottom were in decremental X.X XX.X%. which quarter, call, basis as flow macroeconomic on margins financials to perspective, to million capital of the earnings call control, flat to ample challenging and more of very the total stands flat well, execution backdrop. I and extremely despite led over as the

Vik Kini

Thanks Vicente.

in by provided activity Solutions you if the see comparatives X, the The by XX% impact declines High $XXX IT&S large continue with impacted market in delivered as to to adjusted and the levels The declared segment financials quarter, segment Pressure Pressure was finish historicals the accounts to a QX our a segment of a and offset segment, will to overcapacity challenging Encouragingly million in and Solutions respectively all book-to-bill in saw XX%. the receivable X, was both regions partially within Turning due clean line region High declines assisting transaction We in continued XXXX the and Americas orders which company May, EBITDA in of is generally the a increase levels. as of this reduced as Overall, at in the mostly that orders X.XX. reserve driven for X.XX XX% High of saw to expected also Solutions conditions well XX% April return segment decline led FX-adjusted and part to XXXX growth on impact a the occurred improvement the IT&S China. by company prior in due in revenue customer for be quarter. revenue From the year Pressure an particularly single total volume to the EMEA and and at basis company. This over perspective, saw where declined the and seen trends June. for in had the the bankruptcy. on COVID-XX. January supplemental revenue slide for order in seen positive This

more We will slides. the through in this walk detail in segment upcoming

X. Free a times quarter working included non-critical capital strong prudency $XX particularly Free CapEx. at adjusted cash driven cash the of of which $XX leverage the lower of prior of of million to of measures, related with including flat receivable Moving improvement comprised by well X.X transaction million, despite spend. quarter cash spend $XX reductions of performance EBITDA. million finished to million in $XXX on was and delivery $XX flow for we as flow slide $XX From the QX continued combined LTM the The standup CapEx. as synergy million business was outflows flow free million was management to accounts perspective, including related profitability

do see the to increase ability we've delever to leverage, some shown short-term expect historically. While we to

the the billion. see stands can right of page, of the now at breakdown you company side which $X.X liquidity total On

X% $XXX The executed increased end we by to OID of we the M&A. at cash debt At has facility which $XXX and $XXX disciplined we quarter, on new loan on the covenant-light remainder ample Together a placement debt from and completed revolving total XX.X%, of attractive in term our look our also rates LIBOR floor. existing B same bolt-on increased powder the with of plus credit as dry XXXX. time, the B term Within million in quarter, million. us loan generated was our the QX of growth same of matures ahead opportunistic including as an giving million, strategies execute structure the liquidity the X.XX%, LIBOR also continued

XX. slide Moving to

million, funnel executed facilities. funnel Our remains were quarter very that update incremental consists our which of with $XXX teams synergies strong. annualized out our at procurement like as continue on synergies. more in first the particularly Starting now cost stand to we plans areas opportunities management $XXX iXV and build of Vicente efforts excess noted the add and to structural and the synergies, in an in million

turn. these Let me address of in each

are million the deliver incremental phasing structural reflect savings we Within and in annualized to quarter headcount second have approximately the which XXXX. approximately our from XX% to figure as In compared million procurement to to XX% executed our approximately synergy here XXXX. our million now line communicated cost with These synergy on already with we $XX actions to increase did executed the go synergy in in deliver million and delivery both quarter, in-year of million is savings. approximately the overall XXXX, accelerate $XX coming savings annualized to to we of expectations a in QX. deliver expected taken and figures $XXX in $XX well of delivery of expected million $XX on approximately expecting as $XX reductions total, to continues now in million $XX are target actions Progress synergies of of in with the QX remain XXXX

previously, communicated given overall are on like we target IXV environment. volume-dependent and $XXX current of at remain the As a we three-year frame to million synergies time keeping time prudent cost this over synergy procurement the

continue with of standup and We of synergies incur to associated new million expect achieving company. cost conjunction to these in approximately $XXX also expense the the both

of solid side the the the to continue On show as managing right decrementals progress we page, on company.

Precision quarter, consecutive decline, Science Vehicle with strong Specialty despite decremental second performance our double-digit in segments. the and managed IT&S, For very revenue XX% below we and

a delivery, additional the have approximately the yielded $XX synergy conditions, given million cost was QX. In in of short-term contributor which addition savings we strong reductions to market

All well the of discretionary the given teams, spend as managing operating within the did a great structures, job as quarter. their rightsizing environment cost

redeploy will slower do than it QX, costs currently in Vicente million these will we of P&L While back to the million return market environment approximately if the at we'll expected. turn segments. to these $XX monitoring closely, to I expect is measures, many the of the $XX we're to discuss and recovery now

Vicente Reynal

cancellations with million ex-FX services, quarter versus expect ahead. moving Revenues and quarter ex-FX. figures Starting first shippable Vik, and These The the other a two Industrial and to magnitude de-bookings similar was Thanks, Technologies cancel. were deemed of million large down XX% that contained we we down to intake de-bookings this not decided $XXX order XX% any second prior were two order XX. as leaning million amounting not $XX slide of IT&S year isolated and segment $XXX and projects situations of look book-to-bill to or were X.XX, the debookings. do in ratio including the to

to important to have IRX margin team perspective, this gets respective quality in adjusted of decremental create past IT&S controlling only the as it the margins X% a proper the and result points it feel growth. on normalized XX.X%. focus of better comparison This we're and can organization focus From IT&S more tough XXX to basis despite commercial incremental of combined able with creates With the much once organizational and margins how into to market break earnings we better product record environment to were lines pleased immediate was leading its that limit synergies. us will a we as and margin the understanding structure EBITDA in to back very to allow in I in to said the the demonstrate performance. performed a utilizing our As expansion execute of is mind,

let on composition first granule the me the segment. So of

flat category oil low mid-teens. of the total with XX% segment are which of were comprise and down categories. offerings to compressor product the largely mid-teens and oil down Orders in oil-free lubricated lubricated the compressor and oil-free is compressors the for First

strong. that segment. industrial high-teens. XX-plus where order We're in early not that which month of the Second Europe, but the is are XX% monitoring back relatively closely. These drove the down blowers, largely businesses implying in the quarter while and comprise we're decline range, vacuum of total were percent customer June in will last strength the quarter came in Orders the the sustain, the in closures based

solutions, the the creating and which tough centrifugal on in record segment, year-over-year containing XXXX Pressure Vacuum as QX multistage business the Garo business offering. is were XX% compressor down is low-XXs largely the driven Nash, longer a gears cycle in and quarter a by of centrifugal Next Orders comps. of multistage total

of find business, the We weighted is nearly PTL which the deferred in also due than were some see but attributable in our were And to Tools tool of down was certain within currently better business funnel projects in East, down the more environment. Middle booked the towards second business in in also typical were performance Africa quarter orders hardest we decisions and regional listing orders XX% with the being as side Power believe to June the down while to April segment. half while from COVID-XX. this our of XX% from government more performance due a XX% orders, high-teens, year, customers. the the not investment for our and finally, tools is but business Americas high-XXs. point-of-sale on down the the regions not Lifting, India from the only we the which What compared encouraging the of orders Europe, mid shutdowns orders perspective, to in And was customers, and to May countries, is down complete and that hit saw countrywide due low-XXs, much to

much the June to orders quarter, the And down as month as pacing regions Asia than to low-XXs. down perspective, see a were well. little encouraging the a more the across we and the all rest better earlier flat as of better saw in improvement Pacific sequential of comparatively compared from the China performed was in Pacific Asia XX% with

range are to type to XXXX. X,XXX requirements. we a need that Current both minute offerings either of all needs strong can an very product need feet efficiency. be energy well very large cubic this specific -- want this that efficient this that per to the in TANX lower offering airflow offering oil-free that quarter compressors be auxiliaries best-in-class added tailored compressed can to XXXX customer or efficiencies compressors highly site need for to further The economically become very meet X,XXX the placed. range For creating oil-free highlight at that and economically the Customers highlights, played a deliver air the with modified TANX in have small market, being while while of delivering midsized modularized highly

slide down than to review Science the We'll XX. X. as had $XXX segment and for Technology book-to-bill million, X% X% was performance $XXX greater orders Precision Moving solid ex-FX. Revenue Overall, ex-FX down segment. million, the were

positions concentrators, As a on segment Science end Many markets. focused with that which for products into have run Roy, and Technology mission-critical and in well seven saw leadership is creation demand pumps industrial different and flow pumps Dosatron our XX fighting saw over demand growth more in orders oxygen a product reminder, premium for that very that as strong defer lines by composed products Milton go we of the like as continued on Precision decline with other markets. ventilators the some attractive line P&LS of COVID-XX other in business business offset other brands. X% Medical MP across of technologies and In QX, niche of ex-FX

water in with fluid on mixtures work non-electric power nutrient and Dosatron niche in can continued easiest rates sanitation XX%. proportioning and the safety is mostly chemical see most strong systems, in regardless chemicals accurately that and markets the pump, Dosatron injectors up making to business of order and This is food chemical variations technology and the treatment, reliable in into pressure side ensuring same growth delivery flow environment using health. As end animal dosing like see used to of this excess inject of it page, volumetric right the remain injector a lines. and water you way the

in by and tools quarter to basis Moving points the productivity the to up at only segment adjusted resilient to adjusted basis was Science year-over-year up $XX IRX XX EBITDA. XXX EBITDA use points margin Precision million decremental leading and of and of driven sequentially XX.X%, margins delivered XX%. drive

Moving to Vehicle Technology segment. slide Specialty XX on the

vehicle our to X% demand segment were QX, capture this specialty on IRX Orders and generation the strong was and up priority ex-FX mind we million, deliver margin continue profitable indicated in and performance. for utilizing is commercial $XXX ends in commercial As that growth more X% like both business down e-commerce. with with $XXX and in million, a tools manner, main to And revenue ex-FX.

to commercial QX as saw supplier some As increased the year down last quarter second the as expected that a at be to utility shipments, from reminder, issues in product expected we revenue shifted well declines due revenue of QX to offerings. and

from continued consumer factors as the page. on do right of Onward the side those the offerings While saw play strength out, such business highlighted the product

We success With to to the XX% continue of find with a in direct-to-consumer consumers in sell and service business consumer saw terms the approach channel this shipments a of vehicle in with leveraging focus, nearly while educate our terms the quarter record units. to BXC vehicles. or increase our broad

Moving well which million EBITDA. improvements. IRX product up continued mix drive basis delivered to adjusted points due of to as the of XXX as productivity and use was XX.X%, Vehicles adjusted despite revenue Specialty margin decline tools to EBITDA $XX strong

down to XX%. fleet XX% of from Revenue our reduce was frac their to grew down expectations $XX customers as what which Orders in line in to oil XX% it to includes services was offering side the bring from from by sequentially portfolio. to to primarily continues The newest page. right was we Redline increases QX toughest High Products XX%, life innovation piece up be slide down the being EBITDA The of the we and an our come we adjusted will base cancellations, continue considered most like consumables of sequential the resilient be with aftermarket business continue with From the despite of breakeven. the market. segment. revenue track generally highlighted differentiated Moving QX $X VX majority with decline quarters valve XX and were counts looking nearly performed XX% Solutions look with were $XX as on of to in Pressure parts revenue to gas million, the and the share million spend. line in Even one industry. which with expectations the on differentiators our nearly environment during were and in this million, useful win valve the perspective,

took However, million. specific driver EBITDA our charges on in resulting we provision $XX for adjusted our the to increases major reserves for policy. million bankruptcy accounts based internal in which a receivable to to that a due $XX declared require quarter of million in The customer down reserve mid-July, was $XX us

their Given view we in and bankruptcy are a still collectible is taken outstanding much uncertain to reserve our AR these it have court, through will entire prudent very always working be the proceedings situations. how and way approach the being balance

additional accounts our to environment, current reserve conservative taking the took In more an approach charge million on a addition we receivable due $X quarter. the in

of working actively these receivables year. expect with outstanding our of customers We and in the are half the each here to second collect

and expect of to quarter, cannibalization expected market the about back the third sequentially to growth. while fleets year, overcapacity the in to in the fleet we to pave will horsepower we don't limit As change. of materially equipment count is XX market conditions the of And rise continued half the the

breakeven for we or As and profitability continue result, cost very a prudent better. will be push to on

total continuous the to is The XX%. Precision quarter. as in with momentum Solutions is bit we business slide flat, Vehicles driven Industrial total positive, the vehicle far High XX% Through segment segment as wanted as surprisingly third year a activity Technologies this orders thus negatively do in book-to-bill segment orders trend we Specialty trending how that is from limited rates Pressure to XX% we by perspective at expect consumer has progresses. QX snapshot expect see to QX. although performed of provide We're in as a the And total not time, than down the to demand. company continue quick see XX, a Science order with over to % not Technology but July are mid-teens the more recovery market in and market. largely we in high-level a continue Service providing strong quarter down are one. largely The is or rate ongoing framework, currently business the guidance down low currently greater to Moving the line

addition, we we have expect downturn in seasonality impact see the to will perspective, Vehicle including In typical the in from holidays that we a prior and cycle. normal margin years we seen continue in will European From gold the Specialty level the with headwind but versus are as the cost manage we short-term $XX decrementals, do expect continued the some from the of seen offset a in expected re-enter ramp million of million second to quarter $XX partial to P&L synergies.

be invest we market our we environment want act vigilant overall the intend add as for to will on to continue leading the well-positioned when We plan and will stabilizes. we long-term to business very to also continue to will I growth that also indicators be quickly.

as we We're we're as want transformation. some still our to in excited Moving to we XX, wrap slide leave very takeaways. you early with just today,

even difficult been able have to this tremendous employees Our performance in drive environment.

values amazing own not to say game be this they they among compressor and And soon, for that of work works only who part make will who our customers, Rachel the for member China; able Mohamed our one our These the than employees, amazing team our center Chennai, on out Palani, Huishan, our owners an who amazing from in a Kentucky in more purpose machines share assembly Germany; IRX globally by executed and our in and that facility; [Indiscernible] shop are center multiphase company. for long-term assembly Paolo, in will scheming and with company mapping is utilizing sale in maintenance India. in as a tools of we From and on assembly Max on one employees distribution employee approach to in company soon XX,XXX line communities. line Cumbersville, transformation; a to of in Brazil; worker all an we're Simmern, an an ultimate Charlotte;

open back So, I'll Q&A. with turn and to the call the operator that, for

Operator

with Our from first question Instructions] [Operator Mitchell Julian is Barclays.

Your line is open.

Julian Mitchell

Hi. on discussion temporary the Good just a around side around question Vicente, that right-hand the costs. slide Maybe morning. first XX

So I incremental think at year. the sort the maybe margin talked of for QX XX%-ish earnings you a, of, the balance about

You but dial that the as reinvestment placeholder control the with the is in half sort for did than rough, of, upturn? some cost in second better for QX, you, should of, pending come balance sort we that in

Vicente Reynal

definitely. Yes,

pressure is below as way the we're you you decrementals see coming of is more we saying QX ramp. items little offset here decremental back think that expect XX%. some both were of thinking by the it in And what being low-XX QX But synergy about I said and range. bit these saw we'll of some we're a the be QX to to discretionary said, due still

Julian Mitchell

Okay.

the So second for low XXs half?

Vicente Reynal

Yes.

Julian Mitchell

cash to you. extremely expect so Thank And understand the the you around Perfect. particularly restructuring? cash free the How puts year the should flow to level working what And also or extraction Okay. the of for that relating see us in charges receivables tailwind strong help and performance. That's just clear. synergy $XXX million QX second half that? flow out was playing within secondly, about then quarter. Maybe in second we free and takes capital cash

Vik Kini

I'll Vik. is two this Julian, Yes, in pieces that take here.

more the the Clearly pleased generally across progress the portfolio. free to So, there performance In really performance. on flow second cash QX. opportunity in with with strong pleased really Very side, right. some the go, the good you're but receivables absolutely quarter

in I'd inventory across the continue piece the we're I'd receivables have free equation. continue opportunities side As see total progress payables, there to we opportunities first portfolio. majority going see flow, good on to is and you've working we in of of ahead the we look I'd biggest place for to year inventory initiatives continues opportunities the the capital of seen half say be cash say say some on and now the of, to right of continued lot rightsize the clearly that the side. the and a to over area look just kind do

back to expect and for for quarter on can the costs of equally end out. that XQ $XX in first $XXX cash right synergy we'll see balance your In largely now But $XX We of million year now. cash between we plays we or be split the the right should standup. around of delivery the half part terms delivered track. the in which million around for second spend And about you restructuring-related million good the year of the placeholder would timing how a about kind and roughly We of spend still see quarters. at of expect two of of said question, the costs right the that

Julian Mitchell

Great. Thank you.

Operator

question next Halloran with Your from Baird. is Mike

line open. is Your

Mike Halloran

Good everyone. Hey. morning,

Vicente Reynal

morning, Mike. Good

Mike Halloran

shutdowns is parse worry or that a few equal what of more So the of do some better you impacted out I of for to XX were just XQ other just normal When mean this look for I out commentary to of XQ? on about XQ, saying patterns? patterns just revenue we slide a that to than the have the sequential sequential you there are want pieces, again, that sequential see high-pressure XQ recovery? keep or this softening that sequential by revenue mean in is Obviously, all but within that should quarter. excluding pieces, have line the you still just mind normal else a business, still -- sequential the three are some there trends you kind sequentially you in pretty but

Vicente Reynal

Yes.

the just maybe So me let that Mike, segment. into pieces, take by but of some

to QX So see IT&S Europe. seasonality in holidays, the particularly, the due typically do we in

what of is saw likely second in as than the July so is see better see is which still helping really little driven shift kind April COVID, look more conditions seen, wave have month does can to material going seasonality the to the conditions Vehicle just you And the to as very that XX%, down the of But to XX% orders and business to started apply historical demand orders second any we of, consumer XX% be by improving consumer don't half have XX% And exist. these, QX that's just down and we Science, we demand offset in as And, reference quarter. you that that the well, as cautiously bit, were QX, Currently, from cycle. as will given about see IT&S not year. flat patterns, Precision & we but QX continued And by versus again, performance watching is course. comparable of expect However, of June. what in tend you similar watch And sequentially. tend saw we Specialty that growth and offset to in do we're this much to a saw Pressure, made throughout that loss continue in the assuming the this I to go through get performance, the particularly to a Orders improvement we finally, quarter, from any periods, IT&S. revenue quarter June High uncertainty we May.

Michael Halloran

that. for Thanks

that combination was original there. industrial the of the appreciated. at how seeing you side side, granularity And trends market? But little what moving companies like? I you regional of the about would was as the the a guys you're tech within appreciate How you, selling the the the And versus commentary be blower, tracked? On pieces vacuum performing do you're think two share how of really you against look looks pieces, think do Maybe compressor, any materializing. there when

Vicente Reynal

in on share. share compressors saw most we on quarter, of lot What I reports Mike. compressor we and to the side, last first in on association access U.S. the quarter medium kind the to. and sure side, is we have we Yes, large around some in did And quarter the the share some we based that, the kind the the said are of that felt mean, took compressor a on holding of second particularly small commentary the we known

not losing in consistent for markets and side, or terms which fairly of the or compressor the blower, OEMs again, kind taking treatment no wastewater So, Europe, share through And vacuum primarily of is in mostly like see end blowers on what we the side. on holding shares.

So, obviously, not across one all. but tough we're again, we concerned saw share a that on second world, at where, losing the quarter

Michael Halloran

for it. time. Appreciate Thanks the

Vicente Reynal

Thank Yes. you.

Operator

with Your from is Jeff Research. next question Sprague Vertical

line is Your open.

Jeff Sprague

you. day, everyone. Thank Good

could, the a cash half there. And change takes I of go cash up don't other up? to cash just Julian is and a the didn't in the back leverage on sound leverage just lot, bit restructuring described think item likely there the I back think particularly the follow-up right? kind in Is EBITDA, flow. third onerous a said that It in you if going half. doesn't looking Just, Vik, quarter that in at to some I LTM you first the

Vik Kini

there, XXXX. bit Jeff, some Yes. here -- be referring on little to lap to what noise EBITDA, the adjusted previous I think, we're will of of as a of is we kind the of continue quarters LTM that there

In again, to us And, at meaningful delivering, now, out. the have with normal terms generally the we than at there But, a of of would pass year, some said of leverage we when expecting uptick. cash the historically itself and a play taxes to legacy see to much realm, continue Still we're that might at not the we higher pressure we're the half Denver. the all. the higher levels total of major of have line you've good like we what at not nothing in that of back some call do in say, seen do be bit X.X out, Obviously, little will again, year. but for X Gardner

but you uptick, right slightly maybe now higher. around again, So, levels meaningful even and are not where a the

Jeff Sprague

M&A mentioned kind Great. bolt-on view on, organization just take out into we future? further a your Is or are What's you expect Thanks. should the you pipeline the And ready Vicente, cultivating and very to that? of active that things on a pipeline. general then,

Vicente Reynal

said And the one. I well, cost-heavy it. too, focus just a particularly segment. past technology, it's kind Science that feel a on past, lot we the organization the of of structurally I definitely And mean, Jeff. around we're the & as said lot Yes, in Precision integration have putting is on ready we that of that there's in for as not

it's mean, ready in key So technologies, but one very the on the pipeline, primarily, cultivating Tech & take we're as good I on. Industrial team some well, more. of, also a team is taking And definitely about Services kind feels that and to channel good

Jeff Sprague

Thank you.

Vicente Reynal

you. Thank Sure.

Operator

next question Andy is from Citi. with Your Kaplowitz

Your open. line is

Andy Kaplowitz

good Hey, morning, guys.

Vicente Reynal

morning, Good Andy.

Vik Kini

Good Andy. morning,

Andy Kaplowitz

little Vicente, look are if especially smaller power pandemic. businesses your have to far a of some weaker been tools at seem IT&S businesses in so there that the you during

the out can product intros increasing new the stronger having And legacy June all projects? these For lagging business? there the did more you focused orders You this Is at could performance these in also that of but of businesses on business terms Are talk business? you mention IOR compressor is instance, then you to segments? large balance in about its larger business do given in subsegments?

Vicente Reynal

Yes.

some end is week improving session long-term unique of of markets more XX of actually we four-day more going the side. I softness 'XX, side I has and material the last also there's On the kind -- very we're you I of handling mean more of saw and sales of softness. that 'XX saw the last fact but side in power we customers But orders, pickup oil not What We were had the perspective. putting point alluded month first this some some that online mean planning of the an they think terms review even the it. to on from on channels. and to a question the around tool sessions on putting that strategic we the what of call shift attention continue accelerate what coincidentally our growth? tools to on exposure good that the performs to the and the earnings a what your to got plan question our selling of it's in team business is kind at forward to to here lifting early time. the we forward kind the and at we that side gas tool of that yes softness activity the some good where that have some just see to in We of June pretty look in point we're on putting lifting mean of on

readjust think I take business. to expect really a better that see we it to will of time but So momentum just kind

We now adjustment have cost the and more towards the growth. really pivoting focused been on very we're

you're demand I QX On think compressor -- the really that the legacy of in that business centrifugal. to larger year. This strong saw referring multiphase IR side, is last one the we

a So $XX getting just and I I soft Vietnam. million an project, on example momentum was it's but but single good there worth LNG QX as of say of was markets in XXXX really actually was just wouldn't lot year and of there that refining a mean last upwards it

of kind of just those on some seeing the this versus large some year kind in last of So based projects that of the year second we're larger not quarter happen the really comps happening seeing tough on projects here now. momentum

half they However, see here same strong the funnel coming countries. second and back are in normality the encouraged to because potentially really is as on fairly things from team the some of movement

Andy Kaplowitz

but your it's XX% the creeping early and just in you about XXXX, then think thinking quarter. And XX% of in I you in you said XX% last now of it savings synergy expecting up yet Thanks. synergy target forecast haven't overall that understanding to are changed terms your

you confidence target the even in being volume-dependent? that more So with the does $XXX procurement give million

Vik Kini

is this take that one. Andy Vik. Yes, I'll

answer think is I absolutely in terms confidence. yes of the the

lot levels why again, and a kind a you up healthy us volume XXXX obviously that's have funnel is all higher. we was and take You've to. the supply But baselining target have IXV given feel that Obviously, work quarters. a meaningful confidence heard in we're and at piece of that of executing us few which kind of chain is which that confident we're volume-dependent haven't of reiterate kind still is that procurement when just seen a funnel the funnel but the done and higher last not

Andy Kaplowitz

you. Thank

Operator

is question from Our Deutsche Nicole with Bank. DeBlase next

Nicole DeBlase

guys. Good morning

Vicente Reynal

morning. Good

Nicole DeBlase

the accelerating significantly. maybe I better reason I environment to little in isn't guess July the And getting, quarter cost those? clearly ask feels I a of is but coming got the like the going in bit nature actions back I back the not what's mean guess temporary third it

kind remain of so be what in keep we appetite decline? your revenue if place to actions And would XQ in curious level in I'm of temporary just current the

Vik Kini

Nicole. This Yes, is sure take I'll Vik. that.

if ability the you slow to in recover ramp return. other expected our you in our we those same conditions market and and QX cost to things the deferrals and of many your And and going that equation. your that delivered to warrant prepared the things we numbers we're take which a certain for And the thing we compensation thing show expecting to savings To up of slow alone. level in million same of starting roughly of, the we point make a in markets see piece exceed kind would run be market, have answer you'll second like of discretionary investments and to $XX spend the of prudent management, of We currently question, QX. discretionary saw reduced QX for are $XX of I part leaders, question is, And of payback. your prior to same to measures do expectations would clearly mention million executive kind So that. discretionary of are expect than And to actions We for we to really reductions. and setting kind I'd QX that in of over your as saving we it. cost around growth going to were quarter the implement the to up of here we did some the context furloughs still not future QX. that see spend last QX mirror kind example will demand kind in If growth recovery think ourselves bigger here of things we forward of expect start are the do senior is, to cost expect see the have really we're of components outpaced staying things forward, kind savings around generation, some to rate controls approximately spend equation so QX that that terms there of mention But strong the first we million we in just $XX probably continued look in absolutely.

Nicole DeBlase

the got how million has helpful. I That's color XQ? been a synergies XXXX for just And now. follow-on and And some ramps in cost far in on predominantly around you $XX achieved XQ? what Okay, then the projected Thanks. XQ give can that so just it. maybe guess,

Vik Kini

Yeah, sure.

So million. I structural from savings, simply coming in-year think which stated about million actions. at really a $XX high It's very of is $XX level headcount-oriented

to ramping done now savings, procurement that about majority the of take taken. up actions with of the meant just us we've wouldn't in first right first pretty but in conclusion do XXX% million actions necessarily here I you said seen piece given start those to procurement XXX quarter. here that we XXXX And coming onwards. say the the in-year You've see quickly really days, over $XX The consistent again first is what then we're very

million total So and we related ramp. will between look in target, you're and going that of total ahead synergies $XX the of XX% a terms to pace. million synergy expecting nature of the magnitude the of synergy see same number, at overall as to Obviously start XXXX from ramp XX% to in-year headcount not and of things that same here $XXX that's a year

thereafter. run are four then get And in full probably roughly expecting XX%, obviously XX% you synergies the So then delivered in to we about and year into XX% XX% year of XXXX three. rate the

seen on historically end report. consistent you've back as very the this So of us

Nicole DeBlase

Thanks, on. Vik. I’ll pass it

Operator

Josh next Stanley. Our question Morgan with from Pokrzywinski is

Your line is open.

Josh Pokrzywinski

last year able temporary that incremental forward should pulled run I the in on about question. versus given pickup on you've we that math rolling off funnel How up XXXX? following wasn't real-time to the synergy more in just have savings there. that the think the into the just Vik So next you

Vik Kini

Sure. Yeah.

So here let me kind in them Josh. pieces take of

see by run in short-term year. largely should terms exit the of think and rate in the those large the back actions we I you as

million we about to expect come of some of here savings QX, here in-year Nicole's QX like deferrals think merit the you year. obviously before, we see to back and equation that those in structure XXXX. those again and we to trickle As in like we of QX smaller of the the then got we should back around would equation. things the in piece expect mentioned major That's largely $XX the terms cost cost here the majority P&L exit in I next of $XX into about we've and actions. headcount reentering and million as got the And question then items the ramp But said we of synergy

You to and million between $XX XQ could that QX in probably QX. million it expect $XX then around ramping ratably and

procurement million So a QX, then piece higher closer QX largely being half bit second that and weighted. little of all of in-year to million per the that's probably quarter $XX $XX

the some see on QX a lot really but expect good of half QX. the haven't waves, amount launched related or synergies material the integration really procurement have any a You of will comes when We've I RFQs, of transaction lot of just it to seen related call yet. back in that of here year in should momentum initial to you more the and

Josh Pokrzywinski

next they'll guess be nets but off the small temporary that then, a bleed And the a it. synergy I Got funnel is that? won't push, quite year versus of be number -- incremental out it

Vik Kini

That's right.

Vicente Reynal

fair think way it. to a That's about

Josh Pokrzywinski

Got it.

more it line? gains, a you is the the that it's new is competitor I dominant there. hey can who's remarks share a share rates we've products think comment that larger Since should piece driver a made it's over big have one because time you're commercial new the small a not Obviously market? That's up oil-free on you regularly Anything Anything maybe that and in pretty that side comes us still pretty given areas you some helpful. growth But, on product, the of over performance? a of like big just probably time And on that then product overall initiatives just expect you front. of got this doing piece something to with portfolio of on some seems opening the house. market something Okay. kind be about the oil-free there, attractive of we new of think

Vicente Reynal

sure, -- that our revenue about end terms outperformed is we we're of strength Oil-free is say I about Josh, continue in good performance, of that area product Yeah. flattish what as it into why serves focus that mean And so the the in kind putting a basically tool well know a excited to it of an this oil-lubricated. here. and speaking oil-free for it's resiliency holds actually markets I so of the I'll line. future and lot be

what definitely focused of we yeah, I definitely our attention into of some to So, a are and mean I accomplish definitely lot an it strategies want and here, that that going to continue -- want area is details we without outgrow. to putting we

Josh Pokrzywinski

the Thanks color. Great. for luck Good guys. you to

Vicente Reynal

Yeah. Thanks Josh.

Operator

Our Goldman with Joe Sachs. is next Ritchie question from

Your line open. is

Joe Ritchie

Thanks. on Good as morning, the everyone. And CFO. the Vik, congratulations promotion

Vik Kini

Thank you.

Joe Ritchie

starting what's cancellations with a know already backlog? provide going markets they into But color conversations expect your Maybe on today just I to? kind what your you don't there booked more of on what forward. little repeat Vicente are off, customers mentioned And maybe you were like just related end are been that bit to

Vicente Reynal

of kind larger question by the specific, kind your just really of To be cycle more Yeah. Joe to loan along answer cycle the loan products? it's the the

Joe Ritchie

Yeah, that's yeah, right.

Vicente Reynal

Yeah.

technology, businesses Pressure is business Vacuum of these the kind long-cycle we segment. PVS as a it's like just total think that reminder, most So the XX% our within unit or And the industrial of Solution. of -- call, I in the and

a of That business. X.X. areas: of to performed side Denver, into like Gardner and kind on the downstream the what be they year-to-date being book-to-bill two fairly business Go, mean the You rates can positive quarter, is of in positive of, used call I so business one basis, actually well. main saw even that legacy Nash kind second what actually in order high-single-digits, we the the split

of that So, of We that the that that's second LNG kind the exactly the really business. the it more in process really multi-stage And compressors, mean that year. the year, And the in or such the to quarter gas. we bookings record XXXX, cycle strong saw the second we so are commentary encouraging, what and a meaningful of on said half terms first longer be start shipments end those ones because and good can always for was was want making quarter of want. in the of larger gasification I as in of half we business that's it comps. and markets, tough it that

putting of of terms getting of seeing shift. into now a is maybe that, We're kind of a momentum end bit lot in little a big the end So, was what shift markets, a into basically those markets. And new XXXX. we're earlier

So food compressors we large focus beverage. are putting on these utilizing and for

so, forward. And of as we the market for a well rebalance I think for we see positioned the expect that terms backlog that here kind better end But the moving we're probably of should half. we in stability second fairly

from orders the expect kind here to the hopefully in get still we these second team. half So, that the are based of more on funnel

early XXXX. big of So, that order it's in cancellations. as orders smaller cases large in pushouts were It's not coming just the and just some orders to more, through order a part to compare the

Joe Ritchie

the a comes potentially of at maybe quarter, just And just just like of today this the improvement accelerate taking thinking I my and ability around organization? the performance and That's across lot of see about nice helpful this, portfolio the to and up to you. a deleveraging. Got the question parts was just the maybe again, deleveraging help different portfolio look Vehicle follow-on kind you I are segment and color guess monetize question, pieces optionality Vicente. But there. kind Okay. thinking how the this just it margin really know your about plan to Specialty

Vicente Reynal

businesses, specialty case on but definitely only the not drive in you also see integration, no ready. still to that right margin from vehicle be we're in one the an current order see comes is think number the revenue, we and side. that from the change moment stabilize strategy I create I all we that can when we'll performance in what alternatives, I and perspective into on a time is Joe, And look in mean think that's this potential that one. I our exactly and think some priority doing, Yeah

is the path the have the good on of – improvement time of same invest And a we work to said strategically doing Phase have opening and III remarks, this a in good the of forward businesses kind a I we multi-phase that mean As while transformation. we're terms some really we of each understanding performance. and at we put a drive foundation lot

the I So, some yes exciting road really optionality to mean, I fix down continue we story. We our what's think while later really this in here got the for is businesses.

Joe Ritchie

Thank Great. you. Okay.

Operator

with Your next question Coe is Wolfe Research. Nigel from

Your line is open.

Nigel Coe

me good you morning. Can Thanks, hear okay.

Vicente Reynal

Yes, perfect, Nigel.

Vik Kini

Hi, Nigel.

Nigel Coe

aftermarket I by hey. just Yes. aftermarket, and a impacted to business business within big was obviously that is Great. Industrial of Thanks, want portion mainly that address Tech shutdown. the

just what for outlook the that is during back of year how in the So the tracked half your And sort services? of quarter? curious

Vicente Reynal

Yes.

that segment. for recurring total business So roughly revenue the aftermarket of XX% or

and closures expect be that to future we in and and the mean, creating also in via side are in and moving in for the with And of well. field. allows in So a our large ability the – same to that of large and was machine. associated capabilities monitoring was cases bit quarter, markets. expectations by And encouraged other aftermarket, would time sign investment. on mean, capital need the to is aftermarket future market growing I inability forward platform on good tailwind but impacted from remote than saw we the growth, quarters a see want second line diagnostics the continue QX sustainable of more we of be a a the equipment China IoT aftermarket And service COVID to original sign the to in here we we actually the as customer work and pretty at pent-up to site. the second We're conditions however, also associated clearly that the a which good to and remote this demand will invest. service – a be some opportunity we serviced. a definitely faster which machines in these the machine one as some as Sequentially I assuming the to the really technology more it did QX, quarter great machines this due as

think So long-term side continuation lot a business. signs yes, of of of I of improvement that the good for

Nigel Coe

Just during underperformed the to within aftermarket the average IT&S clarify, so XQ? or segment benchmark

Vicente Reynal

It was the not same. about both – were

Nigel Coe

same? in think obviously curious, the the base the just customer the the follow-on better the the market Okay. of ambition breakeven I just And you your year? potential What you how is for that my Pressure in High Solutions, about back half risks I'm the in to really year. Both mentioned credit then balancing you're performance to the is problems XQ? opportunities second question in further saw back get some with or credit within of in half

Vicente Reynal

Nigel I continue we this third the breakeven segment to Yes. mean, will in that quarter. return believe the to

And as out yet. that We were expect If of I the obviously the that the case. the to seen be in XXX% – to just efforts going as said you also repeat In kind would some the half business mean, to on cost noting quarter first was we a situation. breakeven. financials the that second I we second are not it in pace, forward. year one the be if including this I of it through take to of feel worth moving be continue quarter continued not restructuring

meaningfully second our items of we to of improve outstanding collection which market our while the proper control ARs. we're being is expect very prudent within So focused proactive year, cost conditions to those the don't half on the in control with any ensure of customers and

Nigel Coe

That’s great. you. Thank

Operator

Your next question Rob from with Research. Melius is Wertheimer

line Your open. is

Rob Wertheimer

Thank you. morning, Good everybody.

Vicente Reynal

Rob. morning, Good

Rob Wertheimer

did discipline the and of monitoring then, product too evolution? but and effect soon price much is specific margin on that tracking is maybe it but on either how your ship on or word the see is Thanks. to portfolio management, just some I hold and right just days it's early some pricing in? general initiatives and of IR on how And in then the know question My your assets

Vicente Reynal

Yes Robert.

X.X% we the we're changes yet. actually company, based still different up. saw I So you mean, segments I'll Tech the making we to say But the in the saw price uplift P&L quarter that you Precision – the look in X%. the second at and of on Industrial between the seen Science up if composition price haven't or and

be I yes key question see to as said And in our So believe the earnings. more that's we focus. there's definitely of have of more precise one of mean areas in here -- and opportunities past, quality and we your we to that absolutely, prudent on price.

Rob Wertheimer

pretty suppose contextualizing is And to the then, any lost your any I Perfect. share, results. meaningful seem comments don't that in you quarter helpful in your you think But in oil-free way, right? head-to-head were

Vicente Reynal

correct. No. mean, one that about that we a obviously well think I spoke lot patterns. the And order the see that just on correct. is on I of of. mean that see and as as that's of things that's based indicators I can hear we we third-party the some not the all orders, mean I reports we

Rob Wertheimer

Thanks Vicente. Okay.

Vicente Reynal

Yeah. Thank you.

Operator

Our ISI. from with next Evercore question is Raso David

line open. Your is

David Raso

on trends market of cost basis what are from actions cost us an your next cost couple just a Hi. of Thank where you're out, how you. that structural of price the the of XQ? operating longer-term seeing?... and Can see quarters, kind you are on what your backlog during more like? you of you're help sort versus progressing, you in And what taking sort And seeing with separate

Vik Kini

Yeah, … yeah, David –

David Raso

that Particularly would grateful. both be only not but IT&S, companies,

Vik Kini

Yeah.

cost answer at, easy kind really the that price price what versus think equation, procurement said looking on I equation of to continue up and positive. is the following Vicente particularly remain the

of kind have place largest a Vicente price kind segments, kind IT&S a had Precision course on both up of of mentioned and initiatives the say initiatives little procurement that the We in and as tailwind and good momentum there. procurement more normal Science as two companies together, coming were the I'd between X%. which than X.X% in And showing are seen been was bit of the two

margin So price we profile. equation -- cost see continue in was equation which pretty to cost the a obviously good there seen there

continue price, second there. see see look expect to I momentum good to half we as the So dramatically again results year. especially to the wouldn't with to of And regards different

quality be to very So again, … continue

David Raso

that… So

Vik Kini

it. show both think …I

David Raso

So question. that's my

trying cost So price don't savings? you think, do make of you the cost or the erosion that procurement sure be the or it widen, could price/cost to year-over-year you greater half? will than diminishing continuing, feel for second spread price just I'm the the increase see

Vicente Reynal

here pricing continue of a in actions that the executed improvement seen are in the see we quarter the We Yeah. not pricing on actually in second lot our P&L. the sense that, yet

David Raso

Okay.

the then savings the price with So second in be procurement actually half, the second cost than you're better the to expecting quarter?

Vicente Reynal

Yeah. That's exactly correct.

Vik Kini

It trend correct positively, that's David. will

David Raso

Perfect. Yes.

much. very you Thank Okay.

Vicente Reynal

Thank you.

Operator

Our Walsh question Suisse. with from is John Credit final

Your line is open.

John Walsh

Hi. And Good here. taking thanks morning. in for me

Vicente Reynal

Good morning, John.

John Walsh

amortization little we closing changed clarification Maybe just assumptions just the the have of schedules of with it maybe but the as to about up, thought. across don't transaction has a do I ask first. if QX the if question stepping It's to kind wanted any And greater timing look know different QX? the than to a of expense I deal or bit

Vik Kini

Yeah, do John adjustments the I'll keep working has to price it pretty still that simple through. we're with purchase just It here. really

even you I'd were frankly the through through saw XX days those we of saw QX us up. that QX. a of obviously work you normalization into we say, that And As in kind transaction only QX true

forward. a of going use run rate QX it's So more and again, is be the going should QX good But just what indicative expect levels of forward. you're largely pretty in nothing timing really you'd that again, seeing deal than the the to

John Walsh

heard I a then, maybe remarks. guess, Okay. out anything I And seem running up think to question. normal that's of now Excellent, don't I supply or prepared to be follow-up very there, on and there does perspective? helpful. a call just in mention chain any the Is everything

Vicente Reynal

-- is perspective, everything out and mean this point I issues call I in will at up time. is that John nothing that No. running and mean to creating I

John Walsh

Great. for Thank my you questions. taking

Vicente Reynal

Thanks, John.

Operator

to the Reynal, have further turn questions, to for call at We no time. Vicente I'd closing like this back remarks.

Vicente Reynal

them Thank thank of the Rand also everyone actually you. to their again, I many want employees who their are the in for on to listening our thank on call call today. participating Ingersoll and interest want I to just performance.

And we're forward in path. So look a to few thank next quarter. believe and with you over the days the speaking a we weeks. great in very exciting We many you of performance second for

So thank you. great Have a day.

Operator

today's conference call. concludes This

now may You disconnect.