Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion contains management’s discussion and analysis of our financial condition and results of operations and should be read together with the unaudited condensed consolidated financial statements and the related notes thereto included elsewhere in this Quarterly Report on Form 10-Q. This discussion contains forward-looking statements that reflect our plans, estimates and beliefs and involve numerous risks and uncertainties, including, but not limited to, those described in the “Risk Factors” section of our Annual Report on Form 10-K for the fiscal year ended December 31, 2021 and this Form 10-Q. Actual results may differ materially from those contained in any forward-looking statements. You should carefully read “Special Note Regarding Forward-Looking Statements” in this Quarterly Report on Form 10-Q.

Overview

Our Company

Ingersoll Rand is a global market leader with a broad range of innovative and mission-critical air, fluid, energy and medical technologies, providing services and solutions to increase industrial productivity and efficiency. We manufacture one of the broadest and most complete ranges of compressor, pump, vacuum and blower products in our markets, which, when combined with our global geographic footprint and application expertise, allows us to provide differentiated product and service offerings to our customers. Our products are sold under a collection of premier, market-leading brands, including Ingersoll Rand, Gardner Denver, Nash, CompAir, Thomas, Milton Roy, Seepex, Elmo Rietschle, ARO, Robuschi, Emco Wheaton and Runtech Systems, which we believe are globally recognized in their respective end-markets and known for product quality, reliability, efficiency and superior customer service.

We operate with two reportable segments: Industrial Technologies and Services and Precision and Science Technologies. See Note 17 “Segment Results” to our unaudited condensed consolidated financial statements included elsewhere in this Form 10-Q for a description of our reportable segments.

Items Affecting our Business, Industry and End Markets

The COVID-19 Pandemic and Related Supply Chain Disruptions

We continue to assess and actively manage the impact of the COVID-19 pandemic on our global operations and also the operations of our suppliers and customers. In order to position ourselves to fulfill demand, we continue to monitor the supply chain closely and are taking proactive steps to ensure continuity of supply. We are adhering to all state and country mandates and guidelines wherever we operate. We have taken certain actions to reduce costs and preserve cash given the uncertain environment. The substantial majority of our production sites have remained fully operational this year. Certain facilities, including several manufacturing sites in China, have recently experienced interruptions in production due to outbreaks of COVID-19 infections and subsequent government restrictions. These interruptions have contributed to component shortages and other supply chain constraints that may limit our ability to fulfill customer orders within desired lead times, both directly in the Asia Pacific region and indirectly in other regions. The degree to which the pandemic will continue to impact our operations, and the operations of our customers and suppliers remains uncertain. See “The COVID-19 pandemic could have a material and adverse effect on our business, results of operations and financial condition in the future” in Part I, Item 1A. “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2021 and this Form 10-Q.

General Economic Conditions

Our financial results closely follow changes in the industries and end-markets we serve. Demand for most of our products depends on the level of new capital investment and planned and unplanned maintenance expenditures by our customers. The level of capital expenditures depends, in turn, on the general economic conditions as well as access to capital at reasonable cost.

The ongoing conflict between Russia and Ukraine and the related sanctions and export controls have adversely affected economic conditions in Eastern Europe and certain global industry sectors dependent on those countries. We have limited physical operations and sales in Russia and Ukraine and, to date; have not experienced a material adverse impact on our results of operations or financial condition. Further escalation or prolonged conflict may amplify several of the risks identified in Part I, Item 1A. “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2021.

Foreign Currency Fluctuations

A significant portion of our revenues, approximately 56% for the six month period ended June 30, 2022, was denominated in currencies other than the U.S. dollar. Because much of our manufacturing facilities and labor force costs are outside of the United

States, a significant portion of our costs are also denominated in currencies other than the U.S. dollar. Changes in foreign exchange rates can therefore impact our results of operations and are quantified when significant to our discussion.

Factors Affecting the Comparability of our Results of Operations

Key factors affecting the comparability of our results of operations are summarized below.

Acquisitions

Part of our strategy for growth is to acquire complementary businesses that provide access to new technologies or geographies or expand our offerings. We acquired several businesses during the year ended December 31, 2021. While these acquisitions are not individually significant or significant in the aggregate, they may be relevant when comparing our results from period to period.

See Note 3 “Business Combinations” to our unaudited condensed consolidated financial statements included elsewhere in this Form 10-Q for further discussion of these acquisitions.

Restructuring and Other Business Transformation Initiatives

We continue to execute business transformation initiatives. A key element of those initiatives are restructuring programs within our Industrial Technologies and Services and Precision and Science Technologies segments, as well as at the Corporate level. Restructuring charges, program related facility reorganization, relocation and other costs, and related capital expenditures were impacted most significantly.

Subsequent to the merger of Gardner Denver Holdings, Inc. with Ingersoll-Rand plc's Industrials business segment in an all-stock, Reverse Morris Trust transaction (the “Merger”), we announced a restructuring program (“2020 Plan”) to drive efficiencies and synergies, reduce the number of facilities and optimize operating margin within the merged Company. For the three month period ended June 30, 2022 and 2021, $21.4 million and $9.2 million, respectively, were charged to expense related to this restructuring program. Through June 30, 2022, we recognized expense related to the 2020 Plan of $91.0 million, $15.0 million and $11.8 million for Industrial Technologies and Services, Precision and Science Technologies and Corporate, respectively.

How We Assess the Performance of Our Business

We manage operations through the two business segments described above. In addition to our consolidated GAAP financial measures, we review various non-GAAP financial measures, including Adjusted EBITDA, Adjusted Net Income and Free Cash Flow.

We believe Adjusted EBITDA and Adjusted Net Income are helpful supplemental measures to assist us and investors in evaluating our operating results as they exclude certain items whose fluctuation from period to period do not necessarily correspond to changes in the operations of our business. Adjusted EBITDA represents net income (loss) before interest, taxes, depreciation, amortization and certain non-cash, non-recurring and other adjustment items. We believe that the adjustments applied in presenting Adjusted EBITDA are appropriate to provide additional information to investors about certain material non-cash items and about non-recurring items that we do not expect to continue at the same level in the future. Adjusted Net Income is defined as net income (loss) including interest, depreciation and amortization of non-acquisition related intangible assets and excluding other items used to calculate Adjusted EBITDA and further adjusted for the tax effect of these exclusions.

We use Free Cash Flow to review the liquidity of our operations. We measure Free Cash Flow as cash flows from operating activities less capital expenditures. We believe Free Cash Flow is a useful supplemental financial measure for us and investors in assessing our ability to pursue business opportunities and investments and to service our debt. Free Cash Flow is not a measure of our liquidity under GAAP and should not be considered as an alternative to cash flows from operating activities.

Management and our board of directors regularly use these measures as tools in evaluating our operating and financial performance and in establishing discretionary annual compensation. Such measures are provided in addition to, and should not be considered to be a substitute for, or superior to, the comparable measures under GAAP. In addition, we believe that Adjusted EBITDA, Adjusted Net Income and Free Cash Flow are frequently used by investors and other interested parties in the evaluation of issuers, many of which also present Adjusted EBITDA, Adjusted Net Income and Free Cash Flow when reporting their results in an effort to facilitate an understanding of their operating and financial results and liquidity.

Adjusted EBITDA, Adjusted Net Income and Free Cash Flow should not be considered as alternatives to net income (loss) or any other performance measure derived in accordance with GAAP, or as alternatives to cash flow from operating activities as a

measure of our liquidity. Adjusted EBITDA, Adjusted Net Income and Free Cash Flow have limitations as analytical tools, and you should not consider such measures either in isolation or as substitutes for analyzing our results as reported under GAAP.

See “Non-GAAP Financial Measures” below for reconciliation information.

Results of Continuing Operations

Consolidated results should be read in conjunction with the segment results section herein and Note 17 “Segment Results” to our unaudited condensed consolidated financial statements included elsewhere in this Form 10-Q, which provides more detailed discussions concerning certain components of our Condensed Consolidated Statements of Operations. All intercompany accounts and transactions have been eliminated within the consolidated results.

The following table presents selected Condensed Consolidated Results of Operations of our business for the three and six month periods ended June 30, 2022 and 2021.

			For the Three Month Period Ended June 30,												For the Six Month Period Ended June 30,
			2022						2021						2022						2021
Condensed Consolidated Statement of Operations:
Revenues			$	1,439.9					$	1,279.1					$	2,776.9					$	2,408.6
Cost of sales			870.1						766.4						1,681.0						1,443.8
Gross profit			569.8						512.7						1,095.9						964.8
Selling and administrative expenses			275.6						267.2						541.1						519.5
Amortization of intangible assets			83.6						80.3						169.8						164.5
Other operating expense, net			13.2						25.1						30.6						19.4
Operating income			197.4						140.1						354.4						261.4
Interest expense			23.2						22.7						42.2						45.8
Loss on extinguishment of debt			1.1						—						1.1						—
Other income, net			(7.4)						(34.1)						(12.0)						(36.6)
Income before income taxes			180.5						151.5						323.1						252.2
Provision for income taxes			41.9						12.5						74.3						23.1
Loss on equity method investments			(0.8)						(0.7)						(5.1)						(0.7)
Income from Continuing Operations			137.8						138.3						243.7						228.4
Income (loss) from discontinued operations, net of tax			1.5						96.3						0.1						(83.9)
Net income			139.3						234.6						243.8						144.5
Less: Net income attributable to noncontrolling interests			0.8						0.7						1.6						1.0
Net income attributable to Ingersoll Rand Inc.			$	138.5					$	233.9					$	242.2					$	143.5
Percentage of Revenues:
Gross profit			39.6		%				40.1		%				39.5		%				40.1		%
Selling and administrative expenses			19.1		%				20.9		%				19.5		%				21.6		%
Operating income			13.7		%				11.0		%				12.8		%				10.9		%
Income (loss) from continuing operations			9.6		%				10.8		%				8.8		%				9.5		%
Adjusted EBITDA			23.3		%				22.8		%				23.0		%				22.3		%
Other Financial Data:
Adjusted EBITDA (1)			$	334.9					$	292.1					$	638.5					536.1
Adjusted Net Income (1)			222.5						194.8						423.7						362.8
Cash flows - operating activities			186.1						147.3						236.2						234.8
Cash flows - investing activities			(17.3)						(25.0)						(65.5)						(232.2)
Cash flows - financing activities			(798.7)						(2.3)						(914.8)						(10.1)
Free Cash Flow (1)			164.7						135.7						196.9						208.9

(1)See the “Non-GAAP Financial Measures” section for a reconciliation to comparable GAAP measure.

Revenues

Revenues for the three month period ended June 30, 2022 were $1,439.9 million, an increase of $160.8 million, or 12.6%, compared to $1,279.1 million for the same three month period in 2021. The increase in revenues was primarily due to higher pricing of $102.9 million, acquisitions of $66.5 million, and higher organic volumes of $60.0 million, partially offset by unfavorable impact of foreign currencies of $68.6 million. The percentage of consolidated revenues derived from aftermarket parts and services was 35.3% in the three month period ended June 30, 2022 compared to 35.7% in the same three month period in 2021.

Revenues for the six month period ended June 30, 2022 were $2,776.9 million, an increase of $368.3 million, or 15.3%, compared to $2,408.6 million for the same six month period in 2021. The increase in revenues was primarily due to higher pricing of $169.3 million, higher organic volumes of $150.1 million, and acquisitions of $143.8 million, partially offset by unfavorable impact of foreign currencies of $94.9 million. The percentage of consolidated revenues derived from aftermarket parts and services was 35.7% in the six month period ended June 30, 2022 compared to 36.5% in the same six month period in 2021.

Gross Profit

Gross profit for the three month period ended June 30, 2022 was $569.8 million, an increase of $57.1 million, or 11.1%, compared to $512.7 million for the same three month period in 2021, and as a percentage of revenues was 39.6% for the three month period ended June 30, 2022 and 40.1% for the same three month period in 2021. The increase in gross profit is primarily due to higher pricing, higher organic volumes, and acquisitions discussed above. The decrease in gross profit as a percentage of revenues is primarily due to changes in segment mix.

Gross profit for the six month period ended June 30, 2022 was $1,095.9 million, an increase of $131.1 million, or 13.6%, compared to $964.8 million for the same six month period in 2021, and as a percentage of revenues was 39.5% for the six month period ended June 30, 2022 and 40.1% for the same six month period in 2021. The increase in gross profit is primarily due to higher pricing, higher organic volumes, and acquisitions discussed above. The decrease in gross profit as a percentage of revenues is primarily due to changes in segment mix.

Selling and Administrative Expenses

Selling and administrative expenses were $275.6 million for the three month period ended June 30, 2022, an increase of $8.4 million, or 3.1%, compared to $267.2 million for the same three month period in 2021. The increase in selling and administrative expenses was mainly from businesses acquired in the second half of 2021. Selling and administrative expenses as a percentage of revenues decreased to 19.1% for the three month period ended June 30, 2022 from 20.9% in the same three month period in 2021.

Selling and administrative expenses were $541.1 million for the six month period ended June 30, 2022, an increase of $21.6 million, or 4.2%, compared to $519.5 million for the same six month period in 2021. The increase in selling and administrative expenses was mainly from businesses acquired in the second half of 2021, partially offset by lower stock-based compensation expense. Selling and administrative expenses as a percentage of revenues decreased to 19.5% for the six month period ended June 30, 2022 from 21.6% in the same six month period in 2021.

Amortization of Intangible Assets

Amortization of intangible assets was $83.6 million for the three month period ended June 30, 2022, an increase of $3.3 million, compared to $80.3 million in the same three month period in 2021. The increase was primarily due to acquisitions completed in the second half of 2021.

Amortization of intangible assets was $169.8 million for the six month period ended June 30, 2022, an increase of $5.3 million, compared to $164.5 million in the same six month period in 2021. The increase was primarily due to acquisitions completed in the second half of 2021.

Other Operating Expense, Net

Other operating expense, net was $13.2 million for the three month period ended June 30, 2022, a decrease of $11.9 million, compared to $25.1 million in the same three month period in 2021. The decrease in expense was primarily due to lower acquisition and other transaction related expenses and non-cash charges of $9.9 million and lower foreign currency transaction gains, net of $5.2 million, partially offset by higher restructuring charges of $2.1 million.

Other operating expense, net was $30.6 million for the six month period ended June 30, 2022, an increase of $11.2 million, compared to $19.4 million in the same six month period in 2021. The increase was primarily due to higher restructuring charges of $12.2 million and lower foreign currency transaction gains, net of $9.1 million, partially offset by lower acquisition and other transaction related expenses and non-cash charges of $10.7 million.

Interest Expense

Interest expense was $23.2 million for the three month period ended June 30, 2022, an increase of $0.5 million, compared to $22.7 million in the same three month period in 2021. The increase was primarily due to an increase in the weighted-average interest rate, partially offset by the prepayment of the Dollar Term Loan Series A on September 30, 2021. The weighted average

interest rate was approximately 2.4% for the three month period ended June 30, 2022 and 2.0% in the same three month period in 2021.

Interest expense was $42.2 million for the six month period ended June 30, 2022, a decrease of $3.6 million, compared to $45.8 million in the same six month period in 2021. The decrease was primarily due to the prepayment of the Dollar Term Loan Series A on September 30, 2021, partially offset by an increase in the weighted-average interest rate. The weighted average interest rate was approximately 2.2% for the six month period ended June 30, 2022 and 2.0% in the same period in 2021.

Other Income, Net

Other income, net was $7.4 million and $34.1 million in the three month periods ended June 30, 2022 and 2021, respectively. The decrease was primarily due to the gain on post close settlements in the 2021 period that did not recur in the 2022 period, partially offset by an increase in interest income from short term investments and bank deposits.

Other income, net was $12.0 million and $36.6 million in the six month periods ended June 30, 2022 and 2021, respectively. The decrease was primarily due to the gain on post close settlements in the 2021 period that did not recur in the 2022 period, partially offset by an increase in interest income from short term investments and bank deposits.

Provision for Income Taxes

The provision for income taxes was $41.9 million resulting in a 23.2% effective income tax provision rate for the three month period ended June 30, 2022, compared to a provision for income taxes of $12.5 million resulting in a 8.3% effective income tax provision rate in the same three month period in 2021. The increase in the tax provision for the three month period ended June 30, 2022 is primarily due to the benefit associated with the final settlement on the Merger, and a restructuring benefit recognized during the second quarter of 2021.

The provision for income taxes was $74.3 million resulting in a 23.0% effective income tax provision rate for the six month period ended June 30, 2022, compared to a provision for income taxes of $23.1 million resulting in a 9.2% effective income tax provision rate in the same six month period in 2021. The increase in the tax provision for the six month period ended June 30, 2022 is primarily due to an increase in the pretax book income in jurisdictions with higher effective tax rates combined with decreased earnings in jurisdictions with lower tax rates. In addition, in the six month period ended June 30, 2021, there was a reduction of a significant unrecognized tax reserve related to a non-recurring item as a result of the lapse of the limitation on statutes, a benefit associated with the final settlement on the Merger, and a restructuring benefit recognized during the second quarter of 2021.

Net Income

Net income was $139.3 million for the three month period ended June 30, 2022 compared to net income of $234.6 million in the same three month period in 2021. The decrease in net income was primarily due to lower income from discontinued operations, net of tax, higher provision for income taxes, and lower other income, net, partially offset by higher gross profit on increased revenues.

Net income was $243.8 million for the six month period ended June 30, 2022 compared to net income of $144.5 million in the same six month period in 2021. The increase in net income was primarily due to higher gross profit on increased revenues, lower loss from discontinued operations, net of tax, partially offset by higher provision for income taxes and lower other income, net.

Adjusted EBITDA

Adjusted EBITDA increased $42.8 million to $334.9 million for the three month period ended June 30, 2022 compared to $292.1 million in the same three month period in 2021. Adjusted EBITDA as a percentage of revenues increased 50 basis points to 23.3% for the three month period ended June 30, 2022 from 22.8% for the same three month period in 2021. The increase in Adjusted EBITDA was primarily due to higher pricing of $102.9 million and higher organic sales volume of $23.4 million, partially offset by unfavorable cost inflation and product mix of $64.6 million and the unfavorable impact of foreign currencies of $16.8 million. The increase in Adjusted EBITDA as a percentage of revenues is primarily attributable to higher pricing and volume, partially offset by unfavorable cost inflation and product mix.

Adjusted EBITDA increased $102.4 million to $638.5 million for the six month period ended June 30, 2022 compared to $536.1 million in the same six month period in 2021. Adjusted EBITDA as a percentage of revenues increased 70 basis points to 23.0% for the six month period ended June 30, 2022 from 22.3% for the same six month period in 2021. The increase in Adjusted

EBITDA was primarily due to higher pricing of $169.3 million and higher organic sales volume of $59.9 million, partially offset by unfavorable cost inflation and product mix of $117.3 million. The increase in Adjusted EBITDA as a percentage of revenues is primarily attributable to higher pricing and volume, partially offset by unfavorable cost inflation and product mix.

Adjusted Net Income

Adjusted Net Income increased $27.7 million to $222.5 million for the three month period ended June 30, 2022 compared to $194.8 million in the same three month period in 2021. The increase was primarily due to increased Adjusted EBITDA, partially offset by a higher income tax provision, as adjusted.

Adjusted Net Income increased $60.9 million to $423.7 million for the six month period ended June 30, 2022 compared to $362.8 million in the same six month period in 2021. The increase was primarily due to increased Adjusted EBITDA, partially offset by an increased income tax provision, as adjusted.

Non-GAAP Financial Measures

Set forth below are the reconciliations of Net Income to Adjusted EBITDA and Adjusted Net Income and Cash Flows from Operating Activities to Free Cash Flow.

			For the Three Month Period Ended June 30,												For the Six Month Period Ended June 30,
			2022						2021						2022						2021
Net Income			$	139.3					$	234.6					$	243.8					$	144.5
Less: Income from discontinued operations			2.0						258.5						0.2						80.7
Less: Income tax provision from discontinued operations			(0.5)						(162.2)						(0.1)						(164.6)
Income from Continuing Operations, Net of Tax			137.8						138.3						243.7						228.4
Plus:
Interest expense			23.2						22.7						42.2						45.8
Provision for income taxes			41.9						12.5						74.3						23.1
Depreciation expense (a)			20.1						21.0						41.4						41.3
Amortization expense (b)			83.6						80.3						169.8						164.5
Restructuring and related business transformation costs (c)			9.5						6.7						23.7						9.4
Acquisition and other transaction related expenses and non-cash charges (d)			5.4						14.3						14.9						24.8
Stock-based compensation			22.4						21.5						42.2						43.1
Foreign currency transaction losses (gains), net			(1.8)						3.4						(5.6)						(14.7)
Loss on equity method investments			0.8						0.7						5.1						0.7
Loss on extinguishment of debt			1.1						—						1.1						—
Gain on settlement of post-acquisition contingencies (e)			—						(30.1)						—						(30.1)
Other adjustments (f)			(9.1)						0.8						(14.3)						(0.2)
Adjusted EBITDA			$	334.9					$	292.1					$	638.5					$	536.1
Minus:
Interest expense			$	23.2					$	22.7					$	42.2					$	45.8
Income tax provision, as adjusted (g)			66.3						49.6						124.8						77.6
Depreciation expense			20.1						21.0						41.4						41.3
Amortization of non-acquisition related intangible assets			2.8						4.0						6.4						8.6
Adjusted Income from Continuing Operations, Net of Tax			$	222.5					$	194.8					$	423.7					$	362.8
Free Cash Flow from Continuing Operations:
Cash flows from operating activities from continuing operations			$	186.1					$	147.3					$	236.2					$	234.8
Minus:
Capital expenditures			21.4						11.6						39.3						25.9
Free Cash Flow from Continuing Operations			$	164.7					$	135.7					$	196.9					$	208.9

(a)Depreciation expense excludes $0.8 million and $1.0 million of depreciation of rental equipment for the three month periods ended June 30, 2022 and 2021, respectively, and excludes $1.8 million and $2.0 million for the six month periods ended June 30, 2022 and 2021, respectively.

(b)Represents $80.8 million and $76.3 million of amortization of intangible assets arising from the Merger and other acquisitions (customer relationships, technology, tradenames and backlog) and $2.8 million and $4.0 million of amortization of non-acquisition related intangible assets, in each case for the three month periods ended June 30, 2022 and 2021, respectively.

Represents $163.4 million and $155.9 million of amortization of intangible assets arising from the Merger and other acquisitions (customer relationships, technology, tradenames and backlog) and $6.4 million and $8.6 million of amortization of non-acquisition related intangible assets, in each case for the six month periods ended June 30, 2022 and 2021, respectively.

(c)Restructuring and related business transformation costs consisted of the following.

			For the Three Month Period Ended June 30,												For the Six Month Period Ended June 30,
			2022						2021						2022						2021
Restructuring charges			$	8.9					$	6.8					$	21.4					$	9.2
Facility reorganization, relocation and other costs			0.6						—						2.3						—
Other, net			—						(0.1)						—						0.2
Total restructuring and related business transformation costs			$	9.5					$	6.7					$	23.7					$	9.4

(d)Represents costs associated with successful and/or abandoned acquisitions and divestitures, including third-party expenses, post-closure integration costs, and non-cash charges and credits arising from fair value purchase accounting adjustments.

(e)Represents a gain on settlement of post-acquisition contingencies outside of the measurement period related to adjustments to the transaction price for retirement plan funding and net working capital.

(f)Includes (i) pension and other postemployment (“OPEB”) plan costs other than service cost, (ii) interest income from short term investments and bank deposits and (iii) other miscellaneous adjustments.

(g)Represents our income tax provision adjusted for the tax effect of pre-tax items excluded from Adjusted Net Income and the removal of the applicable discrete tax items. The tax effect of pre-tax items excluded from Adjusted Income is computed using the statutory tax rate related to the jurisdiction that was impacted by the adjustment after taking into account the impact of permanent differences and valuation allowances. Discrete tax items include changes in tax laws or rates, changes in uncertain tax positions relating to prior years and changes in valuation allowances. The adjusted amounts are then used to calculate an adjusted provision for the quarter.

The income tax provision, as adjusted for each of the periods presented below consisted of the following.

			For the Three Month Period Ended June 30,												For the Six Month Period Ended June 30,
			2022						2021						2022						2021
Provision for income taxes			$	41.9					$	12.5					$	74.3					$	23.1
Tax impact of pre-tax income adjustments			22.6						36.4						47.4						44.6
Discrete tax items			1.8						0.7						3.1						9.9
Income tax provision, as adjusted			$	66.3					$	49.6					$	124.8					$	77.6

Segment Results

We classify our business into two segments: Industrial Technologies and Services and Precision and Science Technologies. Our Corporate operations are not discussed separately as any results that had a significant impact on operating results are included in the “Results of Operations” discussion above.

We evaluate the performance of our segments based on Segment Revenues and Segment Adjusted EBITDA. Segment Adjusted EBITDA is indicative of operational performance and ongoing profitability. Our management closely monitors Segment Adjusted EBITDA to evaluate past performance and identify actions required to improve profitability.

The segment measurements provided to and evaluated by the chief operating decision maker are described in Note 17 “Segment Results” to our unaudited condensed consolidated financial statements included elsewhere in this Form 10-Q.

Segment Results for the Three and Six Month Periods Ended June 30, 2022 and 2021

The following tables display Segment Revenues, Segment Adjusted EBITDA and Segment Adjusted EBITDA Margin (Segment Adjusted EBITDA as a percentage of Segment Revenues) for each of our Segments.

Industrial Technologies and Services Segment Results

			For the Three Month Period Ended June 30,												Percent Change
			2022						2021						2022 vs. 2021
Segment Revenues			$	1,150.5					$	1,047.5					9.8		%
Segment Adjusted EBITDA			$	292.0					$	258.6					12.9		%
Segment Margin			25.4		%				24.7		%				70		bps

Segment Revenues for the three month period ended June 30, 2022 were $1,150.5 million, an increase of $103.0 million, or 9.8%, compared to $1,047.5 million in the same three month period in 2021. The increase in Segment Revenues was due to higher pricing of $87.4 million or 8.3%, higher organic volumes of $61.9 million or 5.9%, and acquisitions of $7.0 million or 0.7%, partially offset by unfavorable impact of foreign currencies of $53.3 million or 5.1%. The percentage of Segment Revenues derived from aftermarket parts and service was 39.3% in the three month period ended June 30, 2022 compared to 40.5% in the same three month period in 2021.

Segment Adjusted EBITDA for the three month period ended June 30, 2022 was $292.0 million, an increase of $33.4 million, or 12.9%, from $258.6 million in the same three month period in 2021. Segment Adjusted EBITDA Margin increased 70 basis points to 25.4% from 24.7% in 2021. The increase in Segment Adjusted EBITDA was primarily due to higher pricing of $87.4 million or 33.8%, higher organic sales volume of $24.3 million or 9.4%, and acquisitions of $1.4 million or 0.5%, partially offset by unfavorable cost inflation and product mix of $54.4 million or 21.0%, unfavorable impact of foreign currencies of $13.4 million or 5.2%, and higher selling and administrative costs of $10.8 million or 4.2%.

			For the Six Month Period Ended June 30,												Percent Change
			2022						2021						2022 vs. 2021
Segment Revenues			$	2,190.1					$	1,961.3					11.7		%
Segment Adjusted EBITDA			$	539.4					$	470.1					14.7		%
Segment Margin			24.6		%				24.0		%				60		bps

Segment Revenues for the six month period ended June 30, 2022 were $2,190.1 million, an increase of $228.8 million, or 11.7%, compared to $1,961.3 million in the same six month period in 2021. The increase in Segment Revenues was due to higher pricing of $143.8 million or 7.3%, higher organic volumes of $137.2 million or 7.0%, and acquisitions of $20.3 million or 1.0%, partially offset by unfavorable impact of foreign currencies of $72.5 million or 3.7%. The percentage of Segment Revenues derived from aftermarket parts and service was 40.1% in the six month period ended June 30, 2022 compared to 41.2% in the same six month period in 2021.

Segment Adjusted EBITDA for the six month period ended June 30, 2022 was $539.4 million, an increase of $69.3 million, or 14.7%, from $470.1 million in the same six month period in 2021. Segment Adjusted EBITDA Margin increased 60 basis points to 24.6% from 24.0% in 2021. The increase in Segment Adjusted EBITDA was primarily due to higher pricing of $143.8 million or 30.6%, higher organic sales volume of $54.0 million or 11.5%, and acquisitions of $4.2 million or 0.9%, partially offset by unfavorable cost inflation and product mix of $96.4 million or 20.5%, unfavorable impact of foreign currencies of $17.9 million or 3.8%, and higher selling and administrative costs of $16.9 million or 3.6%.

Precision and Science Technologies Segment Results

			For the Three Month Period Ended June 30,												Percent Change
			2022						2021						2022 vs. 2021
Segment Revenues			$	289.4					$	231.6					25.0		%
Segment Adjusted EBITDA			$	77.7					$	71.1					9.3		%
Segment Margin			26.8		%				30.7		%				(390)		bps

Segment Revenues for the three month period ended June 30, 2022 were $289.4 million, an increase of $57.8 million, or 25.0%, compared to $231.6 million in the same three month period in 2021. The increase in Segment Revenues was primarily due to acquisitions of $59.5 million or 25.7% and higher pricing of $15.5 million or 6.7%, partially offset by unfavorable impact of

foreign currencies of $15.3 million or 6.6% and lower organic volume of $1.9 million or 0.8%. The percentage of Segment Revenues derived from aftermarket parts and service was 19.1% in the three month period ended June 30, 2022 compared to 14.3% in the same three month period in 2021.

Segment Adjusted EBITDA for the three month period ended June 30, 2022 was $77.7 million, an increase of $6.6 million, or 9.3%, from $71.1 million in the same three month period in 2021. Segment Adjusted EBITDA Margin decreased 390 basis points to 26.8% from 30.7% in 2021. The increase in Segment Adjusted EBITDA was primarily due to higher pricing of $15.5 million or 21.8%, acquisitions of $11.3 million or 15.9%, partially offset by unfavorable cost inflation and product mix of $10.2 million or 14.3%, unfavorable impact of foreign currencies of $4.5 million or 6.3% and higher selling and administrative costs of $3.6 million or 5.1% and lower organic sales volume of $0.9 million or 1.3%.

			For the Six Month Period Ended June 30,												Percent Change
			2022						2021						2022 vs. 2021
Segment Revenues			$	586.8					$	447.3					31.2		%
Segment Adjusted EBITDA			$	162.8					$	138.3					17.7		%
Segment Margin			27.7		%				30.9		%				(320)		bps

Segment Revenues for the six month period ended June 30, 2022 were $586.8 million, an increase of $139.5 million, or 31.2%, compared to $447.3 million in the same six month period in 2021. The increase in Segment Revenues was due to acquisitions of $123.5 million or 27.6%, higher pricing of $25.5 million or 5.7%, and higher organic volumes of $12.9 million or 2.9%, partially offset by unfavorable impact of foreign currencies of $22.4 million or 5.0%. The percentage of Segment Revenues derived from aftermarket parts and service was 19.4% in the six month period ended June 30, 2022 compared to 15.7% in the same six month period in 2021.

Segment Adjusted EBITDA for the six month period ended June 30, 2022 was $162.8 million, an increase of $24.5 million, or 17.7%, from $138.3 million in the same six month period in 2021. Segment Adjusted EBITDA Margin decreased 320 basis points to 27.7% from 30.9% in 2021. The increase in Segment Adjusted EBITDA was primarily due to acquisitions of $26.7 million or 19.3%, higher pricing of $25.5 million or 18.4%, and higher organic sales volume of $5.9 million or 4.3%, partially offset by unfavorable cost inflation and product mix of $20.4 million or 14.8%, unfavorable impact of foreign currencies of $6.6 million or 4.8%, and higher selling and administrative costs of $5.0 million or 3.6%.

Orders

Industrial Technologies and Services Segment

The mission-critical nature of our Industrial Technologies and Services segment products across manufacturing processes drives a demand environment and outlook that are correlated with global and regional industrial production, capacity utilization and long-term GDP growth. In the second quarter of 2022, we had $1,280.6 million of orders in our Industrial Technologies and Services segment, an increase of 6.4% over the second quarter of 2021.

Precision and Science Technologies Segment

In 2021 and into early 2022, the Precision and Science Technologies segment has seen increased demand for certain of our products used in processes or systems to mitigate the impact of COVID-19, particularly related to life science and specialty applications. In the second quarter of 2022, we have seen a modest reduction in COVID-19 related demand for these products although it remains above pre-pandemic levels. In the second quarter of 2022, we had $318.2 million of orders in our Precision and Science Technologies segment, an increase of 24.7% over the second quarter of 2021. The increase was due to acquisitions of 28.8% and higher organic orders of 2.3%, partially offset by the unfavorable impact of foreign currencies of 6.4%.

Results of Discontinued Operations

Results of Discontinued Operations - SVT

The components of Income from Discontinued Operations attributable to SVT are summarized below:

			For the Three Month Period Ended June 30,												For the Six Month Period Ended June 30,
			2022						2021						2022						2021
Revenues			$	2.6					$	184.0					$	6.6					$	424.3
Cost of sales			2.6						137.9						6.5						314.9
Gross profit			—						46.1						0.1						109.4
Selling and administrative expenses			—						16.9						0.1						35.3
Amortization of intangible assets			—						0.9						—						10.4
Gain on sale			—						(256.7)						—						(256.7)
Other operating expense, net			(1.9)						9.2						(1.7)						16.2
Income before income taxes			1.9						275.8						1.7						304.2
Provision for income taxes			0.4						162.8						0.4						169.7
Income from Discontinued Operations			$	1.5					$	113.0					$	1.3					$	134.5

The change in income from discontinued operations for the three and six month periods ended June 30, 2022 compared to the same three and six month periods in 2021 is primarily due to the substantial completion of the sale of SVT on June 1, 2021. The remaining activities predominantly relate to SVT operations in one non-U.S. subsidiary. The sale of these SVT assets was subject to delayed closing terms due to local regulatory and administrative requirements. This sale is expected to be completed in the third quarter of 2022.

Results of Discontinued Operations - HPS

The components of Loss from Discontinued Operations attributable to HPS are summarized below:

			For the Three Month Period Ended June 30,												For the Six Month Period Ended June 30,
			2022						2021						2022						2021
Revenues			$	—					$	3.0					$	—					$	65.4
Cost of sales			—						3.9						—						54.4
Gross profit			—						(0.9)						—						11.0
Selling and administrative expenses			—						0.6						—						4.9
Amortization of intangible assets			—						—						—						2.4
Loss on disposal group			—						8.4						—						211.7
Other operating expense, net			(0.1)						7.4						1.5						15.5
Income (loss) before income taxes			0.1						(17.3)						(1.5)						(223.5)
Provision (benefit) for income taxes			0.1						(0.6)						(0.3)						(5.1)
Loss from Discontinued Operations			$	—					$	(16.7)					$	(1.2)					$	(218.4)

The change in results from discontinued operations for the three and six month periods ended June 30, 2022 compared to the same three and six month periods in 2021 is primarily due to the substantial completion of the sale of HPS on April 1, 2021. The remaining activities mainly represent expenses incurred to finalize separation and fulfill transition services.

Liquidity and Capital Resources

Our investment resources include cash on hand, cash generated from operations and borrowings under our Revolving Credit Facility. We also have the ability to seek additional secured and unsecured borrowings, subject to Credit Agreement restrictions.

As of June 30, 2022, we had $1,100.0 million of unused availability under the Revolving Credit Facility.

See the description of these line-of-credit resources in Note 11 “Debt” to the consolidated financial statements in our annual report on Form 10-K for the fiscal year ended December 31, 2021 and Note 9 “Debt” to our unaudited condensed consolidated financial statements included elsewhere in this Form 10-Q.

As of June 30, 2022, we were in compliance with all of our debt covenants and no event of default had occurred or was ongoing.

Liquidity

A substantial portion of our liquidity needs arise from debt service requirements, and from the ongoing cost of operations, working capital and capital expenditures.

			June 30, 2022						December 31, 2021
Cash and cash equivalents			$	1,309.2					$	2,109.6
Short-term borrowings and current maturities of long-term debt			$	31.6					$	38.8
Long-term debt			2,725.7						3,401.8
Total debt			$	2,757.3					$	3,440.6

We can increase the borrowing availability under the Senior Secured Credit Facilities by up to $1,600.0 million in the form of additional commitments under the Revolving Credit Facility and/or incremental term loans plus an additional amount so long as we do not exceed a specified senior secured leverage ratio. We can incur additional secured indebtedness under the term loan facilities if certain specified conditions are met under the credit agreement governing the Senior Secured Credit Facilities. Our liquidity requirements are significant primarily due to debt service requirements. See Note 11 “Debt” to the consolidated financial statements in our annual report on Form 10-K for the fiscal year ended December 31, 2021 and Note 9 “Debt” to our unaudited condensed consolidated financial statements included elsewhere in this Form 10-Q for further details.

Our principal sources of liquidity have been existing cash and cash equivalents, cash generated from operations and borrowings under the Senior Secured Credit Facilities. Our principal uses of cash will be to provide working capital, meet debt service requirements, fund capital expenditures, dividend payments, and finance strategic plans, including possible acquisitions. We may also seek to finance capital expenditures under capital leases or other debt arrangements that provide liquidity or favorable borrowing terms. We continue to consider acquisition opportunities, but the size and timing of any future acquisitions and the related potential capital requirements cannot be predicted. In the event that suitable businesses are available for acquisition upon acceptable terms, we may obtain all or a portion of the necessary financing through the incurrence of additional long-term borrowings. As market conditions warrant, we may from time to time, seek to repay loans that we have borrowed, including the borrowings under the Senior Secured Credit Facilities. Based on our current level of operations and available cash, we believe our cash flow from operations, together with availability under the Revolving Credit Facility, will provide sufficient liquidity to fund our current obligations, projected working capital requirements, debt service requirements and capital spending requirements for the foreseeable future. Our business may not generate sufficient cash flows from operations or future borrowings may not be available to us under our Revolving Credit Facility in an amount sufficient to enable us to pay our indebtedness, or to fund our other liquidity needs. Our ability to do so depends on, among other factors, prevailing economic conditions, many of which are beyond our control. In addition, upon the occurrence of certain events, such as a change in control, we could be required to repay or refinance our indebtedness. We may not be able to refinance any of our indebtedness, including the Senior Secured Credit Facilities, on commercially reasonable terms or at all. Any future acquisitions, joint ventures, or other similar transactions may require additional capital and there can be no assurance that any such capital will be available to us on acceptable terms or at all.

We may from time to time repurchase shares of our common stock in the open market at prevailing market prices (including through Rule 10b5-1 plans), in privately negotiated transactions, a combination thereof or through other transactions. The actual timing, number, manner and value of any shares repurchased will depend on several factors, including the market price of our stock, general market and economic conditions, our liquidity requirements, applicable legal requirement and other business considerations.

A substantial portion of our cash is in jurisdictions outside the United States. We do not assert ASC 740-30 (formerly APB 23) indefinite reinvestment of our historical non-U.S. earnings or future non-U.S. earnings. The Company records a deferred foreign tax liability to cover all estimated withholding, state income tax and foreign income tax associated with repatriating all non-U.S. earnings back to the United States. Our deferred income tax liability as of June 30, 2022 was $63.7 million which primarily consisted of withholding taxes.

Working Capital

			June 30, 2022						December 31, 2021
Net Working Capital:
Current assets of continuing operations:
Current assets			$	3,554.9					$	4,114.9
Less: Assets of discontinued operations			9.1						15.6
Current assets of continuing operations			3,545.8						4,099.3
Current liabilities of continuing operations:
Current liabilities			1,464.8						1,467.7
Less: Liabilities of discontinued operations			8.6						17.1
Current liabilities of continuing operations			1,456.2						1,450.6
Net working capital of continuing operations			$	2,089.6					$	2,648.7
Operating Working Capital:
Accounts receivable			$	1,018.5					$	948.6
Plus: Inventories (excluding LIFO reserve)			1,037.9						878.6
Plus: Contract assets			62.1						60.8
Less: Accounts payable			700.9						670.5
Less: Contract liabilities (current)			270.0						242.1
Operating working capital			$	1,147.6					$	975.4

Net working capital of continuing operations decreased $559.1 million to $2,089.6 million as of June 30, 2022 from $2,648.7 million as of December 31, 2021. Operating working capital increased $172.2 million to $1,147.6 million as of June 30, 2022 from $975.4 million as of December 31, 2021. The increase in operating working capital is primarily due to higher inventories, accounts receivable and contract assets, partially offset by higher accounts payable and contract liabilities.

The increase in accounts receivable was primarily due to seasonal changes in collection timing. The increase in contract assets was primarily due to the timing of revenue recognition and billing on our overtime contracts. The increase in inventories was primarily due to additions to inventory in anticipation of increased demand for certain products. The increase in accounts payable was primarily due to the timing of vendor cash disbursements. The increase in contract liabilities was primarily due to the timing of customer milestone payments for in-process engineered to order contracts.

Cash Flows

The following table reflects the major categories of cash flows for the six month periods ended June 30, 2022 and 2021, respectively.

			For the Six Month Period Ended June 30,
			2022						2021
Cash flows provided by (used in) continuing operations:
Cash flows provided by operating activities			$	236.2					$	234.8
Cash flows used in investing activities			(65.5)						(232.2)
Cash flows used in financing activities			(914.8)						(10.1)
Net cash provided by (used in) discontinued operations			(5.1)						1,933.3
Free cash flow(1)			196.9						208.9

(1)See the “Non-GAAP Financial Measures” section included in this Quarterly Report for a reconciliation to the nearest GAAP measure.

Operating Activities

Cash provided by operating activities increased $1.4 million to $236.2 million for the six month period ended June 30, 2022 from $234.8 million in the same six month period in 2021. This slight increase is primarily attributable to higher income from continuing operations, mostly offset by cash outflows for operating working capital to support the orders increase.

Investing Activities

Cash used in investing activities included capital expenditures of $39.3 million and $25.9 million for the six month periods ended June 30, 2022 and 2021, respectively. Net cash paid in a business combination was $30.3 million and $215.8 million in the six month periods ended June 30, 2022 and 2021, respectively.

Financing Activities

Cash used in financing activities of $914.8 million for the six month period ended June 30, 2022 primarily reflected repayments of long term debt of $639.5 million, purchases of treasury stock of $253.7 million, cash dividends on common stock of $16.2 million, and payments of interest rate cap premiums of $9.7 million, partially offset by proceeds from stock option exercises of $8.4 million.

Cash used in financing activities of $10.1 million for the six month period ended June 30, 2021 primarily reflected repayments of long-term debt of $19.7 million and purchases of treasury stock of $3.2 million, partially offset by proceeds from stock option exercises of $12.8 million.

Discontinued Operations

Cash provided by (used in) discontinued operations decreased $1,938.4 million to $(5.1) million for the six month period ended June 30, 2022 from $1,933.3 million in the same six month period in 2021, primarily due to the sales being substantially completed in the second quarter of 2021. Cash used in discontinued operations for the six month period ended June 30, 2022 related primarily to separation related expenses.

Free Cash Flow

Free cash flow decreased $12.0 million to $196.9 million in the six month period ended June 30, 2022 from $208.9 million in the same six month period in 2021 due to higher capital expenditures, partially offset by increased cash provided by operating activities.

Critical Accounting Estimates

Management has evaluated the accounting estimates used in the preparation of the Company’s condensed consolidated financial statements and related notes and believe those estimates to be reasonable and appropriate. Certain of these accounting estimates require the application of significant judgment by management in selecting appropriate assumptions for calculating financial estimates. By their nature, these judgments are subject to an inherent degree of uncertainty. These judgments are based on historical experience, trends in the industry, information provided by customers and information available from other outside sources, as appropriate. The most significant areas involving management judgments and estimates may be found in the section “Critical Accounting Estimates” of “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” and in Note 1 “Summary of Significant Accounting Policies” of “Item 8. Financial Statements and Supplementary Data” included in our annual report on Form 10-K for the fiscal year ended December 31, 2021.

Environmental Matters

Information with respect to the effect of compliance with environmental protection requirements and resolution of environmental claims on us and our manufacturing operations is contained in Note 16 “Contingencies” to the condensed consolidated financial statements included elsewhere in this Form 10-Q. We believe that as of June 30, 2022, there have been no material changes to the environmental matters disclosed in our annual report on Form 10-K for the fiscal year ended December 31, 2021.

Recent Accounting Pronouncements

The information set forth in Note 1 “Basis of Presentation and Recent Accounting Pronouncements” to our condensed consolidated financial statements under Part 1, Item 1 “Financial Statements” under the heading “Recently Issued Accounting Pronouncements” is incorporated herein by reference.