Gardner Denver Holdings Earnings 2020-09-30

Balance Sheet	Income Statement	Cash Flow
Assets, Equity	Rev, G Profit, Net Income	Ops, Inv, Fin

iri-20200930

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

____________________________

FORM 10-Q

____________________________


☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2020


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ___________to___________

Commission File Number: 001-38095

____________________________

Ingersoll Rand Inc.

(Exact Name of Registrant as Specified in Its Charter)

____________________________


Delaware			46-2393770
(State or Other Jurisdiction of Incorporation or Organization)			(I.R.S. Employer Identification No.)

800-A Beaty Street

Davidson, North Carolina 28036

(Address of Principal Executive Offices) (Zip Code)

(704) 655-4000

(Registrant’s Telephone Number, Including Area Code)

____________________________

Securities Registered Pursuant to Section 12(b) of the Act:


Title of Each Class	Trading Symbol(s)	Name of Each Exchange on Which Registered
Common Stock, $0.01 Par Value per share	IR	New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ý No ¨

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ý No ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer

Accelerated filer

☐

Non-accelerated filer

☐

Smaller reporting company

☐

Emerging growth Company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ý

The registrant had outstanding 417,655,630 shares of Common Stock, par value $0.01 per share, as of October 30, 2020.

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INGERSOLL RAND INC. AND SUBSIDIARIES

FORM 10-Q

INDEX


			Page No.
PART I. FINANCIAL INFORMATION
Item 1. Condensed Consolidated Financial Statements			6
Condensed Consolidated Statements of Operations (Unaudited)			6
Condensed Consolidated Statements of Comprehensive Income (Loss) (Unaudited)			7
Condensed Consolidated Balance Sheets (Unaudited)			8
Condensed Consolidated Statements of Stockholders' Equity (Unaudited)			9
Condensed Consolidated Statements of Cash Flows (Unaudited)			11
Note 1. Basis of Presentation and Recent Accounting Pronouncements			12
Note 2. Business Combinations			13
Note 3. Restructuring			19
Note 4. Inventories			20
Note 5. Goodwill and Other Intangible Assets			20
Note 6. Accrued Liabilities			21
Note 7. Benefit Plans			22
Note 8. Debt			24
Note 9. Stock-Based Compensation Plan			27
Note 10. Accumulated Other Comprehensive Income (Loss)			29
Note 11. Hedging Activities and Fair Value Measurements			31
Note 12. Revenue from Contracts with Customers			35
Note 13. Income Taxes			39
Note 14. Other Operating Expense, Net			39
Note 15. Contingencies			39
Note 16. Segment Results			40
Note 17. Related Party Transactions			43
Note 18. Earnings (Loss) Per Share			43
Note 19. Noncontrolling Interests			43
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations			45
Item 3. Quantitative and Qualitative Disclosures About Market Risk			65
Item 4. Controls and Procedures			66
PART II. OTHER INFORMATION
Item 1. Legal Proceedings			67
Item 1A. Risk Factors			67
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds			67
Item 3. Defaults Upon Senior Securities			67
Item 4. Mine Safety Disclosures			67
Item 5. Other Information			67
Item 6. Exhibits			68
SIGNATURES			69

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SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

In addition to historical information, this Form 10-Q may contain “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), which are subject to the “safe harbor” created by those sections. All statements, other than statements of historical facts included in this Form 10-Q, including statements concerning our plans, objectives, goals, beliefs, business strategies, future events, business conditions, results of operations, financial position, business outlook, business trends and other information, may be forward-looking statements. Words such as “estimates,” “expects,” “contemplates,” “will,” “anticipates,” “projects,” “plans,” “intends,” “believes,” “forecasts,” “may,” “should” and variations of such words or similar expressions are intended to identify forward-looking statements. The forward-looking statements are not historical facts, and are based upon our current expectations, beliefs, estimates and projections, and various assumptions, many of which, by their nature, are inherently uncertain and beyond our control. Our expectations, beliefs, estimates and projections are expressed in good faith and we believe there is a reasonable basis for them. However, there can be no assurance that management’s expectations, beliefs, estimates and projections will result or be achieved and actual results may vary materially from what is expressed in or indicated by the forward-looking statements.

There are a number of risks, uncertainties and other important factors, many of which are beyond our control, that could cause our actual results to differ materially from the forward-looking statements contained in this Form 10-Q. Such risks, uncertainties and other important factors that could cause actual results to differ include, among others, the risks, uncertainties and factors set forth under “Item 1A. Risk Factors” of our Annual Report on Form 10-K for the fiscal year ended December 31, 2019, and “Part II. Item 1A. Risk Factors” in our quarterly report on Form 10-Q for the quarterly period ended March 31, 2020, as such risk factors may be updated from time to time in our periodic filings with the SEC, and are accessible on the SEC’s website at www.sec.gov, and also include the following:

•The COVID-19 pandemic has adversely affected our business and results of operations, and could have a material and adverse effect on our business, results of operations and financial condition in the future;

•The anticipated benefits of our acquisition of the Ingersoll Rand Industrial business may not be realized fully or at all, may take longer to realize than expected and the integration process will be complex, costly and time-consuming, which could adversely affect our business, financial results and financial condition.

•We have exposure to the risks associated with instability in the global economy and financial markets, which may negatively impact our revenues, liquidity, suppliers and customers.

•More than half of our sales and operations are in non-U.S. jurisdictions and we are subject to the economic, political, regulatory and other risks of international operations.

•Our revenues and operating results, especially in the High Pressure Solutions segment, depend on the level of activity in the energy industry, which is significantly affected by volatile oil and gas prices.

•Our results of operations are subject to exchange rate and other currency risks. A significant movement in exchange rates could adversely impact our results of operations and cash flows.

•Potential governmental regulations restricting the use, and increased public attention to and litigation regarding the impacts, of hydraulic fracturing or other processes on which it relies could reduce demand for our products.

•We face competition in the markets we serve, which could materially and adversely affect our operating results.

•Large or rapid increases in the cost of raw materials and component parts, substantial decreases in their availability or our dependence on particular suppliers of raw materials and component parts could materially and adversely affect our operating results.

•Our operating results could be adversely affected by a loss or reduction of business with key customers or consolidation or the vertical integration of our customer base.

•Credit and counterparty risks could harm our business.

•Acquisitions and integrating such acquisitions create certain risks and may affect our operating results.

•The loss of, or disruption in, our distribution network could have a negative impact on our abilities to ship products, meet customer demand and otherwise operate our business.

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•Our ongoing and expected restructuring plans and other cost savings initiatives may not be as effective as we anticipate, and we may fail to realize the cost savings and increased efficiencies that we expect to result from these actions. Our operating results could be negatively affected by our inability to effectively implement such restructuring plans and other cost savings initiatives.

•Our success depends on our executive management and other key personnel and our ability to attract and retain top talent throughout the Company.

•If we are unable to develop new products and technologies, our competitive position may be impaired, which could materially and adversely affect our sales and market share.

•Cost overruns, delays, penalties or liquidated damages could negatively impact our results, particularly with respect to fixed-price contracts for custom engineered products.

•The risk of non-compliance with U.S. and foreign laws and regulations applicable to our international operations could have a significant impact on our results of operations, financial condition or strategic objectives.

•Changes in tax or other laws, regulations, or adverse determinations by taxing or other governmental authorities could increase our effective tax rate and cash taxes paid or otherwise affect our financial condition or operating results.

•A significant portion of our assets consists of goodwill and other intangible assets, the value of which may be reduced if we determine that those assets are impaired.

•Our business could suffer if we experience employee work stoppages, union and work council campaigns or other labor difficulties.

•We are a defendant in certain asbestos and silica-related personal injury lawsuits, which could adversely affect our financial condition.

•A natural disaster, catastrophe, pandemic or other event could adversely affect our operations.

•Information systems failure may disrupt our business and result in financial loss and liability to our customers.

•The nature of our products creates the possibility of significant product liability and warranty claims, which could harm our business.

•Environmental compliance costs and liabilities could adversely affect our financial condition.

•Third parties may infringe upon our intellectual property or may claim we have infringed their intellectual property, and we may expend significant resources enforcing or defending our rights or suffer competitive injury.

•We face risks associated with our pension and other postretirement benefit obligations.

•Our substantial indebtedness could have important adverse consequences and adversely affect our financial condition.

•We may not be able to generate sufficient cash to service all of our indebtedness, and may be forced to take other actions to satisfy our obligations under our indebtedness, which may not be successful.

•Despite our level of indebtedness, we and our subsidiaries may still be able to incur substantially more debt, including off-balance sheet financing, contractual obligations and general and commercial liabilities. This could further exacerbate the risks to our financial condition described above.

•The terms of the credit agreement governing the Senior Secured Credit Facilities may restrict our current and future operations, particularly our ability to respond to changes or to take certain actions.

•Our variable rate indebtedness subjects us to interest rate risk, which could cause our debt service obligations to increase significantly.

•When we utilize derivative financial instruments to reduce our exposure to market risks from changes in interest rates on our variable rate indebtedness, we will be exposed to risks related to counterparty credit worthiness or non-performance of these instruments.

•If the financial institutions that are part of the syndicate of our Revolving Credit Facility fail to extend credit under our facility or reduce the borrowing base under our Revolving Credit Facility, our liquidity and results of operations may be adversely affected.

•The Company may face risk associated with the discontinuation of and transition from currently used financial reference rates.

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We caution you that the risks, uncertainties and other factors referenced above may not contain all of the risks, uncertainties and other factors that are important to you. In addition, we cannot assure you that we will realize the results, benefits or developments that we expect or anticipate or, even if substantially realized, that they will result in the consequences or affect us or our business in the way expected. There can be no assurance that (i) we have correctly measured or identified all of the factors affecting our business or the extent of these factors’ likely impact, (ii) the available information with respect to these factors on which such analysis is based is complete or accurate, (iii) such analysis is correct or (iv) our strategy, which is based in part on this analysis, will be successful. All forward-looking statements in this report apply only as of the date of this report or as of the date they were made and, except as required by applicable law, we undertake no obligation to publicly update any forward-looking statement, whether as a result of new information, future developments or otherwise.

All references to “we,” “us,” “our,” the “Company” or “Ingersoll Rand” in this Quarterly Report on Form 10-Q mean Ingersoll Rand Inc. and its subsidiaries, unless the context otherwise requires.

Website Disclosure

We use our website www.irco.com as a channel of distribution of Company information. Financial and other important information regarding us is routinely accessible through and posted on our website. Accordingly, investors should monitor our website, in addition to following our press releases, SEC filings and public conference calls and webcasts. In addition, you may automatically receive e-mail alerts and other information about Ingersoll Rand Inc. when you enroll your email address by visiting the “Email Alerts” section of our website at investors.irco.com. The contents of our website are not, however, a part of this Quarterly Report on Form 10-Q.

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PART I. FINANCIAL INFORMATION

ITEM 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

INGERSOLL RAND INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited; in millions, except per share amounts)


	For the Three Month Period Ended September 30,				For the Nine Month Period Ended September 30,
	2020		2019		2020		2019
Revenues	$	1,335.2	$	596.7	$	3,399.5	$	1,846.1
Cost of sales	853.2		375.2		2,313.0		1,159.7
Gross Profit	482.0		221.5		1,086.5		686.4
Selling and administrative expenses	245.6		95.3		648.7		323.0
Amortization of intangible assets	114.2		30.4		284.0		92.6
Impairment of intangible assets	19.9		—		19.9		—
Other operating expense, net	28.0		22.9		178.6		43.1
Operating Income (Loss)	74.3		72.9		(44.7)		227.7
Interest expense	28.8		23.2		86.7		68.0
Loss on extinguishment of debt	—		—		2.0		0.2
Other income, net	(2.6)		(0.6)		(5.1)		(3.1)
Income (Loss) Before Income Taxes	48.1		50.3		(128.3)		162.6
Provision for income taxes	18.2		9.0		55.2		29.2
Net Income (Loss)	29.9		41.3		(183.5)		133.4
Less: Net income attributable to noncontrolling interests	0.4		—		1.4		—
Net Income (Loss) Attributable to Ingersoll Rand Inc.	$	29.5	$	41.3	$	(184.9)	$	133.4

Basic income (loss) per share	$	0.07	$	0.20	$	(0.50)	$	0.66
Diluted income (loss) per share	$	0.07	$	0.20	$	(0.50)	$	0.64

The accompanying notes are an integral part of these condensed consolidated financial statements.

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INGERSOLL RAND INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(Unaudited; in millions)


	For the Three Month Period Ended September 30,				For the Nine Month Period Ended September 30,
	2020		2019		2020		2019
Comprehensive Income (Loss) Attributable to Ingersoll Rand Inc.
Net income (loss) attributable to Ingersoll Rand Inc.	$	29.5	$	41.3	$	(184.9)	$	133.4
Other comprehensive income (loss), net of tax
Foreign currency translation adjustments, net	142.6		(48.8)		95.3		(55.3)
Unrecognized gain on cash flow hedges, net	4.2		3.3		10.9		4.7
Pension and other postretirement prior service cost and gain or (loss), net	(1.0)		1.9		2.4		3.3
Total other comprehensive income (loss), net of tax	145.8		(43.6)		108.6		(47.3)
Comprehensive income (loss) Attributable to Ingersoll Rand Inc.	$	175.3	$	(2.3)	$	(76.3)	$	86.1
Comprehensive Income (Loss) Attributable to Noncontrolling Interests
Net income attributable to noncontrolling interests	$	0.4	$	—	$	1.4	$	—
Other comprehensive income (loss), net of tax
Foreign currency translation adjustments, net	3.8		—		(1.6)		—
Total other comprehensive income (loss), net of tax	3.8		—		(1.6)		—
Comprehensive income (loss) attributable to noncontrolling interests	4.2		—		(0.2)		—
Total Comprehensive Income (Loss)	$	179.5	$	(2.3)	$	(76.5)	$	86.1

The accompanying notes are an integral part of these condensed consolidated financial statements.

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INGERSOLL RAND INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited; in millions, except share amounts)


	September 30, 2020		December 31, 2019
Assets
Current assets:
Cash and cash equivalents	$	1,313.3	$	505.5
Accounts receivable, net of allowance for doubtful accounts of $66.5 and $18.4, respectively	934.6		459.1
Inventories	1,007.4		502.5
Other current assets	204.5		76.8
Total current assets	3,459.8		1,543.9
Property, plant and equipment, net of accumulated depreciation of $361.9 and $298.4, respectively	807.9		326.6
Goodwill	6,205.7		1,287.7
Other intangible assets, net	4,783.9		1,255.0
Deferred tax assets	9.6		3.0
Other assets	343.6		212.2
Total assets	$	15,610.5	$	4,628.4
Liabilities and Stockholders’ Equity
Current liabilities:
Short-term borrowings and current maturities of long-term debt	$	40.1	$	7.6
Accounts payable	624.7		322.9
Accrued liabilities	761.0		244.1
Total current liabilities	1,425.8		574.6
Long-term debt, less current maturities	3,837.2		1,603.8
Pensions and other postretirement benefits	275.4		99.7
Deferred income taxes	905.2		251.0
Other liabilities	337.0		229.4
Total liabilities	$	6,780.6	$	2,758.5
Commitments and contingencies (Note 15)	—		—
Stockholders’ equity
Common stock, $0.01 par value; 1,000,000,000 shares authorized; 419,174,020 and 206,767,529 shares issued as of September 30, 2020 and December 31, 2019, respectively	4.2		2.1
Capital in excess of par value	9,277.0		2,302.0
Accumulated deficit	(327.3)		(141.4)
Accumulated other comprehensive loss	(147.4)		(256.0)
Treasury stock at cost; 1,590,299 and 1,701,785 shares as of September 30, 2020 and December 31, 2019, respectively	(34.8)		(36.8)
Total Ingersoll Rand Inc. stockholders’ equity	$	8,771.7	$	1,869.9
Noncontrolling interests	58.2		—
Total stockholders’ equity	$	8,829.9	$	1,869.9
Total liabilities and stockholders’ equity	$	15,610.5	$	4,628.4

The accompanying notes are an integral part of these condensed consolidated financial statements.

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INGERSOLL RAND INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(Unaudited; in millions)


	For the Three Month Period Ended September 30,
	2020		2019
Number of Common Shares Issued
Balance at beginning of period	418.6		205.7
Issuance of common stock for stock-based compensation plans	0.6		0.5
Balance at end of period	419.2		206.2
Common Stock
Balance at beginning of period	$	4.2	$	2.1
Issuance of common stock for stock-based compensation plans	—		—
Balance at end of period	$	4.2	$	2.1
Capital in Excess of Par Value
Balance at beginning of period	$	9,256.5	$	2,287.9
Issuance of common stock for stock-based compensation plans	5.5		4.7
Issuance of treasury stock for stock-based compensation plans	(0.7)		(0.7)
Stock-based compensation	15.7		2.4
Balance at end of period	$	9,277.0	$	2,294.3
Accumulated Deficit
Balance at beginning of period	$	(356.8)	$	(208.4)
Net income attributable to Ingersoll Rand Inc.	29.5		41.3
Balance at end of period	$	(327.3)	$	(167.1)
Accumulated Other Comprehensive Loss
Balance at beginning of period	$	(293.2)	$	(258.9)
Foreign currency translation adjustments, net	142.6		(48.8)
Unrecognized gains on cash flow hedges, net	4.2		3.3
Pension and other postretirement prior service cost and gain or loss, net	(1.0)		1.9
Balance at end of period	$	(147.4)	$	(302.5)
Treasury Stock
Balance at beginning of period	$	(35.8)	$	(37.4)
Purchases of treasury stock	(0.1)		(0.1)
Issuance of treasury stock for stock-based compensation plans	1.1		1.2
Balance at end of period	$	(34.8)	$	(36.3)
Total Ingersoll Rand Inc. Stockholders' Equity	$	8,771.7	$	1,790.5
Noncontrolling Interests
Balance at beginning of period	$	66.9	$	0.0
Net income attributable to noncontrolling interests	0.4		0.0
Foreign currency translation adjustments, net	3.8		—
Acquisition of noncontrolling interests (Note 19)	(12.9)		—
Balance at end of period	$	58.2	$	0.0
Total Stockholders’ Equity	$	8,829.9	$	1,790.5

The accompanying notes are an integral part of these condensed consolidated financial statements.

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INGERSOLL RAND INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(Unaudited; in millions)


	For the Nine Month Period Ended September 30,
	2020		2019
Number of Common Shares Issued
Balance at beginning of period	206.8		201.1
Issuance of common stock for stock-based compensation plans	1.4		5.1
Shares issued to acquire Ingersoll Rand Industrial	211.0		—
Balance at end of period	419.2		206.2
Common Stock
Balance at beginning of period	$	2.1	$	2.0
Issuance of common stock for stock-based compensation plans	—		0.1
Shares issued to acquire Ingersoll Rand Industrial	2.1		—
Balance at end of period	$	4.2	$	2.1
Capital in Excess of Par Value
Balance at beginning of period	$	2,302.0	$	2,282.7
Issuance of common stock for stock-based compensation plans	11.4		29.4
Issuance of treasury stock for stock-based compensation plans	(2.2)		(25.9)
Shares issued for Ingersoll Rand Industrial acquisition	6,917.4		—
Fair value attributable to pre-merger service for replacement equity awards	8.6		—
Fair value attributable to pre-merger service for deferred compensation plan	8.9		—
Cost incurred to issue shares for Ingersoll Rand Industrial acquisition	(1.0)		—
Stock-based compensation	31.9		8.1
Balance at end of period	$	9,277.0	$	2,294.3
Accumulated Deficit
Balance at beginning of period	$	(141.4)	$	(308.7)
Net income (loss) attributable to Ingersoll Rand Inc.	(184.9)		133.4
Cumulative-effect adjustment upon adoption of new accounting standard (ASU 2018-02)	—		8.2
Cumulative-effect adjustment upon adoption of new accounting standard (ASU 2016-13)	(1.0)		—
Balance at end of period	$	(327.3)	$	(167.1)
Accumulated Other Comprehensive Loss
Balance at beginning of period	$	(256.0)	$	(247.0)
Foreign currency translation adjustments, net	95.3		(55.3)
Unrecognized gains on cash flow hedges, net	10.9		4.7
Pension and other postretirement prior service cost and gain or loss, net	2.4		3.3
Cumulative-effect adjustment upon adoption of new accounting standard (ASU 2018-02)	—		(8.2)
Balance at end of period	$	(147.4)	$	(302.5)
Treasury Stock
Balance at beginning of period	$	(36.8)	$	(53.0)
Purchases of treasury stock	(1.4)		(17.3)
Issuance of treasury stock for stock-based compensation plans	3.4		34.0
Balance at end of period	$	(34.8)	$	(36.3)
Total Ingersoll Rand Inc. Stockholders' Equity	$	8,771.7	$	1,790.5
Noncontrolling Interests
Balance at beginning of period	$	—	$	—
Noncontrolling interest from acquisition of Ingersoll Rand Industrial	73.3		—
Net income attributable to noncontrolling interests	1.4		—
Foreign currency translation adjustments, net	(1.6)		—
Acquisition of noncontrolling interests (Note 19)	(14.9)		—
Balance at end of period	$	58.2	$	—
Total Stockholders’ Equity	$	8,829.9	$	1,790.5

The accompanying notes are an integral part of these condensed consolidated financial statements.

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INGERSOLL RAND INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited; in millions)


	For the Nine Month Period Ended September 30,
	2020		2019
Cash Flows From Operating Activities:
Net income (loss)	$	(183.5)	$	133.4
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Amortization of intangible assets	284.0		92.6
Depreciation in cost of sales	64.9		33.3
Depreciation in selling and administrative expenses	10.7		7.0
Impairment of intangible assets	19.9		—
Stock-based compensation expense	29.0		13.4
Foreign currency transaction losses, net	14.0		3.1

Non-cash adjustments to carrying value of LIFO inventories	45.9		—
Other non-cash adjustments	14.5		0.1
Changes in assets and liabilities:
Receivables	108.5		47.7
Inventories	94.8		(26.2)
Accounts payable	(46.7)		9.7
Accrued liabilities	59.8		(10.9)
Other assets and liabilities, net	(13.3)		(58.9)
Net cash provided by operating activities	502.5		244.3
Cash Flows Used In Investing Activities:
Capital expenditures	(33.5)		(33.8)
Net cash acquired (paid) in business combinations	9.4		(12.0)
Disposals of property, plant and equipment	1.6		0.7
Net cash used in investing activities	(22.5)		(45.1)
Cash Flows From (Used In) Financing Activities:
Principal payments on long-term debt	(1,609.2)		(30.8)
Proceeds from long-term debt	1,980.1		—
Purchases of treasury stock	(1.4)		(17.3)
Proceeds from stock option exercises	12.7		37.3
Payments of contingent consideration	(0.7)		(2.0)
Payments of debt issuance costs	(47.4)		(0.3)
Payments of costs incurred to issue shares for Ingersoll Rand Industrial acquisition	(1.0)		—
Acquisition of noncontrolling interests	(14.9)		—
Other financing	(0.3)		—
Net cash provided by (used in) financing activities	317.9		(13.1)
Effect of exchange rate changes on cash and cash equivalents	9.9		(0.9)
Net increase in cash and cash equivalents	807.8		185.2
Cash and cash equivalents, beginning of period	505.5		221.2
Cash and cash equivalents, end of period	$	1,313.3	$	406.4
Supplemental Cash Flow Information
Cash paid for income taxes	$	73.9	$	53.8
Cash paid for interest	79.9		64.0
Leased assets obtained in exchange for new operating lease liabilities	21.0		6.3
Capital expenditures in accounts payable	3.5		4.1

The accompanying notes are an integral part of these condensed consolidated financial statements.

Table of Content

INGERSOLL RAND INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited; in millions, except share and per share amounts)

Note 1. Basis of Presentation and Recent Accounting Pronouncements

Basis of Presentation

On February 29, 2020, Ingersoll Rand Inc. (formerly known as Gardner Denver Holdings, Inc.) completed the acquisition of the Ingersoll Rand Industrial business (“Ingersoll Rand Industrial”) by way of merger and changed its name from Gardner Denver Holdings, Inc. to Ingersoll Rand Inc. The condensed consolidated financial statements as of and for the nine month period ended September 30, 2020 include the financial results of Ingersoll Rand Industrial from the date of acquisition.

Ingersoll Rand Inc. is a diversified, global manufacturer of highly engineered, application-critical flow control products and provider of related aftermarket parts and services. The accompanying condensed consolidated financial statements include the accounts of Ingersoll Rand Inc. and its majority-owned subsidiaries (collectively referred to herein as “Ingersoll Rand” or the “Company”).

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (GAAP) for interim financial reporting, the instructions for Form 10-Q and Article 10 of the U.S. Securities and Exchange Commission (SEC) Regulation S-X. In the Company’s opinion, the condensed consolidated financial statements reflect all adjustments of a normal recurring nature necessary for a fair statement of the results for the interim periods presented. The condensed consolidated financial statements should be read in conjunction with the Company’s audited consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2019. We have reclassified certain prior year amounts to conform to the current year presentation.

The results of operations for the interim periods ended September 30, 2020 are not necessarily indicative of future results. The ongoing novel Coronavirus (“COVID-19”) pandemic is a continuously evolving situation around the globe that has negatively impacted and could continue to negatively impact the global economy. The Company’s operating results will be subject to fluctuations based on general economic conditions, and the extent to which COVID-19 may ultimately impact its business will depend on future developments, which are highly uncertain and cannot be predicted with confidence, such as the ultimate extent of the spread of the disease and the duration of the outbreak and business closures or business disruptions for the Company, suppliers and customers.

Immediately prior to the acquisition of Ingersoll Rand Industrial, affiliates of Kohlberg Kravis Roberts & Co. L.P. (“KKR”) owned 70,671,135 shares of common stock of the Company or approximately 34%, of the total outstanding common stock of the Company. As of September 30, 2020, KKR owns 44,788,635 shares of common stock of the Company or approximately 11% of the total outstanding common stock of the Company.

Recently Adopted Accounting Standard Updates (“ASU”)

In August 2018, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2018-15, Intangibles – Goodwill and Other – Internal-Use Software (Subtopic 350-40); Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract. The amendments in this update require implementation costs incurred by customers in cloud computing arrangements (i.e., hosting arrangements) to be capitalized under the same premises of authoritative guidance for internal-use software, and deferred over the noncancelable term of the cloud computing arrangement plus any option renewal periods that are reasonably certain to be exercised by the customer or for which the exercise is controlled by the service provider. The Company adopted this guidance prospectively on January 1, 2020. The adoption did not have a material impact on the Company’s condensed consolidated financial statements.

In August 2018, the FASB issued ASU 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework – Changes to the Disclosure Requirements for Fair Value Measurement. The amendments in this update eliminate, add and modify certain disclosure requirements for fair value measurements as part of its disclosure framework project. The Company adopted this guidance on January 1, 2020. The adoption did not have a material impact on the Company’s condensed consolidated financial statements.

Table of Content

In June 2016, the FASB issued ASU 2016-13, Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments (“ASU 2016-13”), which added an impairment model that is based on expected losses rather than incurred losses and is called the Current Expected Credit Losses (“CECL”) model. This impairment model is applicable to loans, debt securities, trade receivables, net investments in leases, off-balance sheet credit exposures, reinsurance receivables as well as any other financial asset with the contractual right to receive cash. Under the new model, an allowance equal to the estimate of lifetime expected credit losses is recognized which will result in more timely loss recognition. The guidance is intended to reduce complexity by decreasing the number of credit impairment models. The Company adopted this guidance on January 1, 2020, using a modified retrospective transition method. The Company recorded a cumulative-effect adjustment on the adoption date increasing “Accumulated deficit” in the Condensed Consolidated Balance Sheets by $1.0 million and decreasing “Accounts receivable, net of allowance for doubtful accounts” in the Condensed Consolidated Balance Sheets by $1.0 million.

Recently Issued Accounting Pronouncements

In March 2020, the FASB issued ASU 2020-4, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting, which provides optional expedients and exceptions for a limited time to ease the potential burden of accounting for reference rate reform on financial reporting. This guidance applies to contracts, hedging relationships and other transactions affected by the discontinuation of the London Interbank Offered Rate (“LIBOR”) and other interbank offered rates. The guidance is effective beginning on March 12, 2020 through December 31, 2022. The Company has not utilized any of the optional expedients or exceptions available under this ASU. The Company will continue to assess whether this ASU is applicable throughout the effective period.

In December 2019, the FASB issued ASU 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes. The amendments in this update simplify the accounting for income taxes by removing certain exceptions and amending and clarifying existing guidance. The guidance is effective for public companies beginning with the first quarter of 2021. Early adoption is permitted. The Company is currently assessing the impact of this ASU on its condensed consolidated financial statements and evaluating the timing of adoption.

In August 2018, the FASB issued ASU 2018-14, Disclosure Framework – Changes to the Disclosure Requirements for Defined Benefit Plans. The amendments in this update eliminate, add and modify certain disclosure requirements for defined benefit pension plans. The guidance is effective for public companies beginning with its annual report for fiscal year 2020. This ASU will not have a material impact on the Company’s condensed consolidated financial statements.

Note 2. Business Combinations

Ingersoll Rand Industrial Acquisition

On February 29, 2020, Ingersoll Rand completed the acquisition of Ingersoll Rand Industrial for the total estimated purchase consideration of approximately $6,937.0 million which represents Ingersoll Rand common stock with a fair value of $6,919.5 million and the balance equal to the fair value attributable to pre-acquisition service for replacement equity awards and deferred compensation arrangements settled in shares (or valued by reference to shares) of Ingersoll Rand common stock. Ingersoll Rand Industrial is a global provider of mission-critical flow control and compression equipment and associated aftermarket parts, consumables and services. Ingersoll Rand acquired Ingersoll Rand Industrial to extend and enhance its portfolio of products to address market opportunities in the compressor, blower, pump and other industrial product markets.

Immediately prior to the merger, Trane Technologies plc (formerly known as Ingersoll-Rand plc) (“Old IR” or “Trane Technologies”) completed a spin-off in which it distributed one share of common stock of Ingersoll-Rand Industrial US. Holdco, Inc. (“SpinCo”), par value $0.01 per share, for each share of Old IR, outstanding as of the record date for the spin-off on February 24, 2020. In accordance with the merger agreement by and among Ingersoll Rand, Old IR, SpinCo and Charm Merger Sub Inc., a wholly owned subsidiary of Ingersoll Rand (“Merger Sub”), Merger Sub merged with and into SpinCo (the “acquisition”) and each share of common stock of SpinCo, par value $

Price	28.68	EPS	1
Shares	209	P/E	45
MCap	5,994	P/FCF	25
Net Debt	1,195	EBIT	232
TEV	7,189	TEV/EBIT	31
TTM 2019-09-30, in MM, except price, ratios

10-Q	2020-09-30	Filed 2020-11-03
10-Q	2020-06-30	Filed 2020-08-04
10-Q	2020-03-31	Filed 2020-05-15
10-K	2019-12-31	Filed 2020-02-26
10-Q	2019-09-30	Filed 2019-10-30
10-Q	2019-06-30	Filed 2019-08-02
10-Q	2019-03-31	Filed 2019-04-30
10-K	2018-12-31	Filed 2019-02-27
10-Q	2018-09-30	Filed 2018-10-29
10-Q	2018-06-30	Filed 2018-08-03
S-1	2018-04-30	Public Filing
10-Q	2018-03-31	Filed 2018-04-27
10-K	2017-12-31	Filed 2018-02-16
10-Q	2017-09-30	Filed 2017-10-27
10-Q	2017-06-30	Filed 2017-08-04

8-K	2020-11-02	Earnings, Exhibits
8-K	2020-08-03	Earnings, Exhibits
8-K	2020-06-29	Enter Agreement, Off-BS Arrangement, Exhibits
8-K	2020-06-16
8-K	2020-06-16
8-K	2020-06-16
8-K	2020-06-12
8-K	2020-06-05
8-K	2020-06-05
8-K	2020-05-12
8-K	2020-05-01
8-K	2020-04-15
8-K	2020-02-28
8-K	2020-02-21
8-K	2020-02-17
8-K	2020-02-13
8-K	2020-01-30
8-K	2020-01-27
8-K	2019-12-12
8-K	2019-10-28
8-K	2019-10-03
8-K	2019-07-31
8-K	2019-06-29
8-K	2019-06-28
8-K	2019-05-09
8-K	2019-04-30
8-K	2019-04-30
8-K	2019-04-30
8-K	2019-02-19
8-K	2018-12-18
8-K	2018-12-13
8-K	2018-11-28
8-K	2018-10-31
8-K	2018-10-25
8-K	2018-10-24
8-K	2018-09-11
8-K	2018-08-01
8-K	2018-05-10
8-K	2018-05-02
8-K	2018-04-26
8-K	2018-02-15
8-K	2018-02-07
8-K	2018-01-05

EX-31.1	ir2020q310-qex311.htm
EX-31.2	ir2020q310-qex312.htm
EX-32.1	ir2020q310-qex321.htm
EX-32.2	ir2020q310-qex322.htm

GDI 10Q Quarterly Report

Gardner Denver Holdings Earnings 2020-09-30