Ingersoll Rand 10-Q 2023-03-31

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 March 31, 2023

or

☐			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.)

525 Harbour Place Drive, Suite 600

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			ý						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 404,519,504 shares of Common Stock, par value $0.01 per share, as of April 28, 2023.

INGERSOLL RAND INC. AND SUBSIDIARIES

FORM 10-Q

INDEX

			Page No.
PART I. FINANCIAL INFORMATION
Item 1. Condensed Consolidated Financial Statements			5
Condensed Consolidated Statements of Operations (Unaudited)			5
Condensed Consolidated Statements of Comprehensive Income (Loss) (Unaudited)			6
Condensed Consolidated Balance Sheets (Unaudited)			7
Condensed Consolidated Statements of Stockholders' Equity (Unaudited)			8
Condensed Consolidated Statements of Cash Flows (Unaudited)			9
Note 1. Basis of Presentation and Recent Accounting Pronouncements			10
Note 2. Discontinued Operations			10
Note 3. Business Combinations			11
Note 4. Restructuring			13
Note 5. Allowance for Credit Losses			14
Note 6. Inventories			14
Note 7. Goodwill and Other Intangible Assets			14
Note 8. Accrued Liabilities			15
Note 9. Benefit Plans			16
Note 10. Debt			16
Note 11. Stock-Based Compensation Plans			17
Note 12. Accumulated Other Comprehensive Loss			19
Note 13. Hedging Activities and Derivative Instruments			20
Note 14. Fair Value Measurements			23
Note 13. Revenue from Contracts with Customers			25
Note 16. Income Taxes			27
Note 17. Other Operating Expense, Net			27
Note 18. Contingencies			27
Note 19. Segment Results			28
Note 20. Earnings Per Share			30
Note 21. Subsequent Event			30
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations			31
Item 3. Quantitative and Qualitative Disclosures About Market Risk			42
Item 4. Controls and Procedures			42
PART II. OTHER INFORMATION
Item 1. Legal Proceedings			43
Item 1A. Risk Factors			43
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds			43
Item 3. Defaults Upon Senior Securities			43
Item 4. Mine Safety Disclosures			43
Item 5. Other Information			43
Item 6. Exhibits			45
SIGNATURES			46

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, 2022, 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:

• 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.

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

• Information systems failure or disruption, due to cyber terrorism or other actions, may adversely impact our business and result in financial loss to the Company or liability to our 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.

• 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.

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

• Shareholder and customer emphasis on environmental, social, and governance responsibility may impose additional costs on us or expose us to new risks.

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

• 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.

• 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.

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

• 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.

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

• 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.

• 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.

• 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.

• 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.

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

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

• 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.

• We may not realize all of the expected benefits of the acquisition of and merger with the Industrial business of Ingersoll-Rand plc.

• Dispositions create certain risks and may affect our operating results.

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

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

• 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.

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

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

• Our 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.

• The terms of the credit agreement governing the Senior Secured Credit Facilities (as amended, the “Credit Agreement”) 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.

• We utilize derivative financial instruments to reduce our exposure to market risks from changes in interest rates on our variable rate indebtedness and 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 Revolving Credit Facility, our liquidity and results of operations may be adversely affected.

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 “Investor 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.

PART I. FINANCIAL INFORMATION

INGERSOLL RAND INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited; in millions, except per share amounts)

			For the Three Month Period Ended March 31,
			2023						2022
Revenues			$	1,629.3					$	1,337.0
Cost of sales			965.1						810.9
Gross Profit			664.2						526.1
Selling and administrative expenses			311.1						265.5
Amortization of intangible assets			92.4						86.2
Other operating expense, net			20.4						17.4
Operating Income			240.3						157.0
Interest expense			38.9						19.0
Other income, net			(9.6)						(4.6)
Income from Continuing Operations Before Income Taxes			211.0						142.6
Provision for income taxes			48.1						32.4
Income (loss) on equity method investments			0.3						(4.3)
Income from Continuing Operations			163.2						105.9
Loss from discontinued operations, net of tax			—						(1.4)
Net Income			163.2						104.5
Less: Net income attributable to noncontrolling interests			2.1						0.8
Net Income Attributable to Ingersoll Rand Inc.			$	161.1					$	103.7
Amounts attributable to Ingersoll Rand Inc. common stockholders:
Income from continuing operations, net of tax			$	161.1					$	105.1
Loss from discontinued operations, net of tax			—						(1.4)
Net income attributable to Ingersoll Rand Inc.			$	161.1					$	103.7
Basic earnings per share of common stock:
Earnings from continuing operations			$	0.40					$	0.26
Loss from discontinued operations			—						—
Net earnings			0.40						0.25
Diluted earnings per share of common stock:
Earnings from continuing operations			$	0.39					$	0.25
Loss from discontinued operations			—						—
Net earnings			0.39						0.25

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

INGERSOLL RAND INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(Unaudited; in millions)

			For the Three Month Period Ended March 31,
			2023						2022
Comprehensive Income Attributable to Ingersoll Rand Inc.
Net income attributable to Ingersoll Rand Inc.			$	161.1					$	103.7
Other comprehensive income (loss), net of tax:
Foreign currency translation adjustments, net			30.8						(28.8)
Unrecognized loss on cash flow hedges			(5.3)						—
Pension and other postretirement prior service cost and gain (loss), net			(0.2)						(1.1)
Total other comprehensive income (loss), net of tax			25.3						(29.9)
Comprehensive income attributable to Ingersoll Rand Inc.			$	186.4					$	73.8
Comprehensive Income Attributable to Noncontrolling Interests
Net income attributable to noncontrolling interests			$	2.1					$	0.8
Other comprehensive income, net of tax:
Foreign currency translation adjustments, net			0.9						0.6
Total other comprehensive income, net of tax			0.9						0.6
Comprehensive income attributable to noncontrolling interests			3.0						1.4
Total Comprehensive Income			$	189.4					$	75.2

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

INGERSOLL RAND INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited; in millions, except share amounts)

			March 31, 2023						December 31, 2022
Assets
Current assets:
Cash and cash equivalents			$	1,119.3					$	1,613.0
Accounts receivable, net of allowance for credit losses of $51.0 and $47.2, respectively			1,243.6						1,122.0
Inventories			1,122.6						1,025.4
Other current assets			186.9						206.9
Total current assets			3,672.4						3,967.3
Property, plant and equipment, net of accumulated depreciation of $443.0 and $417.4, respectively			64

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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, 2022. 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 19 “Segment Results” to our unaudited condensed consolidated financial statements included elsewhere in this Form 10-Q for a description of our reportable segments.

Recent Developments

On April 21 2023, the Company entered into Amendment No. 9 to the Credit Agreement, which (a) extended the maturity date for the revolving credit commitments from June 28, 2024 to April 21, 2028, (b) increased the aggregate revolving credit commitments from $1,100.0 million to $2,000.0 million, and (c) made certain other corresponding changes and updates. Other than as modified by Amendment No. 9, the loans under the Credit Agreement continue to have the same terms and the parties to the Credit Agreement continue to have the same obligations set forth in the Credit Agreement.

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. 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, 2022 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, 2022.

Foreign Currency Fluctuations

A significant portion of our revenues, approximately 55% for the three month period ended March 31, 2023, 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. While acquisitions, as discussed further in Note 3, are not individually significant or significant in the aggregate, they may be relevant when comparing our results from period to period.

See Note 3 “Acquisitions” 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.

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 19 “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 month periods ended March 31, 2023 and 2022.

			For the Three Month Period Ended March 31,
			2023						2022
Condensed Consolidated Statement of Operations:
Revenues			$	1,629.3					$	1,337.0
Cost of sales			965.1						810.9
Gross profit			664.2						526.1
Selling and administrative expenses			311.1						265.5
Amortization of intangible assets			92.4						86.2
Other operating expense, net			20.4						17.4
Operating income			240.3						157.0
Interest expense			38.9						19.0
Other income, net			(9.6)						(4.6)
Income before income taxes			211.0						142.6
Provision for income taxes			48.1						32.4
Income (loss) on equity method investments			0.3						(4.3)
Income from Continuing Operations			163.2						105.9
Loss from discontinued operations, net of tax			—						(1.4)
Net income			163.2						104.5
Less: Net income attributable to noncontrolling interests			2.1						0.8
Net income attributable to Ingersoll Rand Inc.			$	161.1					$	103.7
Percentage of Revenues:
Gross profit			40.8		%				39.3		%
Selling and administrative expenses			19.1		%				19.9		%
Operating income			14.7		%				11.7		%
Income from Continuing Operations			10.0		%				7.9		%
Adjusted EBITDA			24.6		%				22.7		%
Other Financial Data:
Adjusted EBITDA (1)			$	400.1					$	303.6
Adjusted Net Income (1)			267.0						201.2
Cash flows - operating activities			170.3						50.1
Cash flows - investing activities			(581.5)						(48.2)
Cash flows - financing activities			(89.3)						(116.1)
Free Cash Flow (1)			147.9						32.2

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

Revenues

Revenues for the three month period ended March 31, 2023 were $1,629.3 million, an increase of $292.3 million, or 21.9%, compared to $1,337.0 million for the same three month period in 2022. The increase in revenues was primarily due to higher

pricing of $135.9 million, higher organic volumes of $136.3 million, and acquisitions of $77.0 million, partially offset by the unfavorable impact of foreign currencies of $56.9 million. The percentage of consolidated revenues derived from aftermarket parts and services was 36.5% in the three month period ended March 31, 2023 compared to 36.2% in the same three month period in 2022.

Gross Profit

Gross profit for the three month period ended March 31, 2023 was $664.2 million, an increase of $138.1 million, or 26.2%, compared to $526.1 million for the same three month period in 2022, and as a percentage of revenues was 40.8% for the three month period ended March 31, 2023 and 39.3% for the same three month period in 2022. The increase in gross profit is primarily due to higher pricing, higher organic volumes, and acquisitions discussed above. The increase in gross profit as a percentage of revenues is primarily due to the benefits of pricing changes in excess of inflation in material and labor costs.

Selling and Administrative Expenses

Selling and administrative expenses were $311.1 million for the three month period ended March 31, 2023, an increase of $45.6 million, or 17.2%, compared to $265.5 million for the same three month period in 2022. The increase in selling and administrative expenses was mainly from businesses acquired in the second half of 2022 and first quarter of 2023 and higher incentive compensation expense. Selling and administrative expenses as a percentage of revenues decreased to 19.1% for the three month period ended March 31, 2023 from 19.9% in the same three month period in 2022.

Amortization of Intangible Assets

Amortization of intangible assets was $92.4 million for the three month period ended March 31, 2023, an increase of $6.2 million, compared to $86.2 million in the same three month period in 2022. The increase was primarily due to businesses acquired in the second half of 2022 and first quarter of 2023 discussed in Note 3 “Acquisitions” to our unaudited condensed consolidated financial statements included elsewhere in this Form 10-Q.

Other Operating Expense, Net

Other operating expense, net was $20.4 million for the three month period ended March 31, 2023, an increase of $3.0 million, compared to $17.4 million in the same three month period in 2022. The increase in expense was primarily due to higher acquisition and other transaction related expenses and non-cash charges of $7.7 million and the change in foreign currency transaction gains (losses), net of $4.8 million, partially offset by lower restructuring charges of $9.6 million.

Interest Expense

Interest expense was $38.9 million for the three month period ended March 31, 2023, an increase of $19.9 million, compared to $19.0 million in the same three month period in 2022. The increase was primarily due to an increase in the weighted-average interest rate, partially offset by the prepayment of the Euro Term Loan on June 30, 2022 and the interest rate derivative contracts discussed in Note 13 “Hedging Activities and Derivative Instruments” to our unaudited condensed consolidated financial statements included elsewhere in this Form 10-Q. The weighted average interest rate, including the impact of the interest rate derivative contracts, was approximately 5.2% for the three month period ended March 31, 2023 and 1.9% in the same three month period in 2022.

Other Income, Net

Other income, net was $9.6 million and $4.6 million in the three month periods ended March 31, 2023 and 2022, respectively. The increase was primarily due to an increase in interest income from holdings of cash and cash equivalents.

Provision for Income Taxes

The provision for income taxes was $48.1 million resulting in a 22.8% effective income tax provision rate for the three month period ended March 31, 2023, compared to a provision for income taxes of $32.4 million resulting in a 22.7% effective income tax provision rate in the same three month period in 2022. The increase in the tax provision for the three month period ended March 31, 2023 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.

Net Income

Net income was $163.2 million for the three month period ended March 31, 2023 compared to net income of $104.5 million in the same three month period in 2022. The increase in net income was primarily due to higher gross profit on increased revenues, partially offset by higher selling and administrative expenses, higher interest expense, and higher provision for income taxes.

Adjusted EBITDA

Adjusted EBITDA increased $96.5 million to $400.1 million for the three month period ended March 31, 2023 compared to $303.6 million in the same three month period in 2022. Adjusted EBITDA as a percentage of revenues increased 190 basis points to 24.6% for the three month period ended March 31, 2023 from 22.7% for the same three month period in 2022. The increase in Adjusted EBITDA was primarily due to higher pricing of $135.9 million and higher organic sales volume of $52.2 million, partially offset by unfavorable cost inflation and product mix of $54.5 million and the unfavorable impact of foreign currencies of $15.3 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 $65.8 million to $267.0 million for the three month period ended March 31, 2023 compared to $201.2 million in the same three month period in 2022. The increase was primarily due to increased Adjusted EBITDA, partially offset by higher interest expense and a higher 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 March 31,
			2023						2022
Net Income			$	163.2					$	104.5
Less: Loss from discontinued operations			—						(1.8)
Less: Income tax benefit from discontinued operations			—						0.4
Income from Continuing Operations, Net of Tax			163.2						105.9
Plus:
Interest expense			38.9						19.0
Provision for income taxes			48.1						32.4
Depreciation expense (a)			20.7						21.3
Amortization expense (b)			92.4						86.2
Restructuring and related business transformation costs (c)			4.3						14.2
Acquisition and other transaction related expenses and non-cash charges (d)			18.0						9.5
Stock-based compensation			12.1						19.8
Foreign currency transaction losses (gains), net			1.0						(3.8)
Loss (income) on equity method investments			(0.3)						4.3
Adjustments to LIFO inventories			7.8						—
Other adjustments (e)			(6.1)						(5.2)
Adjusted EBITDA			$	400.1					$	303.6
Minus:
Interest expense			$	38.9					$	19.0
Income tax provision, as adjusted (f)			75.6						58.5
Depreciation expense			20.7						21.3
Amortization of non-acquisition related intangible assets			2.6						3.6
Interest income on cash and cash equivalents			(4.7)						—
Adjusted Income from Continuing Operations, Net of Tax			$	267.0					$	201.2
Free Cash Flow from Continuing Operations:
Cash flows from operating activities from continuing operations			$	170.3					$	50.1
Minus:
Capital expenditures			22.4						17.9
Free Cash Flow from Continuing Operations			$	147.9					$	32.2

(a)Depreciation expense excludes $0.9 million and $1.0 million of depreciation of rental equipment for the three month periods ended March 31, 2023 and 2022, respectively.

(b)Represents $89.8 million and $82.6 million of amortization of intangible assets arising from acquisitions (customer relationships, technology, tradenames and backlog) and $2.6 million and $3.6 million of amortization of non-acquisition related intangible assets, in each case, for the three month periods ended March 31, 2023 and 2022, respectively.

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

			For the Three Month Period Ended March 31,
			2023						2022
Restructuring charges			$	2.9					$	12.5
Facility reorganization, relocation and other costs			1.4						1.7
Total restructuring and related business transformation costs			$	4.3					$	14.2

(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)Includes (i) pension and other postemployment plan costs other than service cost, (ii) interest income on cash and cash equivalents and (iii) other miscellaneous adjustments.

(f)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 March 31,
			2023						2022
Provision for income taxes			$	48.1					$	32.4
Tax impact of pre-tax income adjustments			28.1						24.8
Discrete tax items			(0.6)						1.3
Income tax provision, as adjusted			$	75.6					$	58.5

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 19 “Segment Results” to our unaudited condensed consolidated financial statements included elsewhere in this Form 10-Q.

Segment Results for the Three Month Periods Ended March 31, 2023 and 2022

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 March 31,												Percent Change
			2023						2022						2023 vs. 2022
Segment Orders			$	1,450.3					$	1,292.8					12.2		%
Segment Revenues			$	1,317.2					$	1,039.6					26.7		%
Segment Adjusted EBITDA			$	345.6					$	247.4					39.7		%
Segment Margin			26.2		%				23.8		%				240		bps

Segment Orders for the three month period ended March 31, 2023 were $1,450.3 million, an increase of $157.5 million, or 12.2%, compared to $1,292.8 million in the same three month period in 2022. The increase in Segment Orders was due to organic growth of $129.0 million or 10.0% and acquisitions of $78.7 million or 6.1%, partially offset by the unfavorable impact of foreign currencies of $50.2 million or 3.9%.

Segment Revenues for the three month period ended March 31, 2023 were $1,317.2 million, an increase of $277.6 million, or 26.7%, compared to $1,039.6 million in the same three month period in 2022. The increase in Segment Revenues was due to higher pricing of $106.9 million or 10.3%, higher organic volumes of $147.3 million or 14.2%, and acquisitions of $69.9 million or 6.7%, partially offset by unfavorable impact of foreign currencies of $46.5 million or 4.5%. The percentage of Segment Revenues derived from aftermarket parts and service was 40.0% in the three month period ended March 31, 2023 compared to 40.9% in the same three month period in 2022.

Segment Adjusted EBITDA for the three month period ended March 31, 2023 was $345.6 million, an increase of $98.2 million, or 39.7%, from $247.4 million in the same three month period in 2022. Segment Adjusted EBITDA Margin increased 240 basis points to 26.2% from 23.8% in 2022. The increase in Segment Adjusted EBITDA was primarily due to higher pricing of $106.9 million or 43.2%, higher organic sales volume of $57.1 million or 23.1%, and acquisitions of $18.6 million or 7.5%, partially offset by unfavorable cost inflation and product mix of $46.1 million or 18.6%, higher selling and administrative costs of $21.3 million or 8.6% and unfavorable impact of foreign currencies of $12.7 million or 5.1%.

Precision and Science Technologies Segment Results

			For the Three Month Period Ended March 31,												Percent Change
			2023						2022						2023 vs. 2022
Segment Orders			$	326.5					$	337.1					(3.1)		%
Segment Revenues			$	312.1					$	297.4					4.9		%
Segment Adjusted EBITDA			$	94.5					$	85.1					11.0		%
Segment Margin			30.3		%				28.6		%				170		bps

Segment Orders for the three month period ended March 31, 2023 were $326.5 million, a decrease of $10.6 million, or 3.1%, compared to $337.1 million in the same three month period in 2022. The decrease in Segment Orders was due to the unfavorable impact of foreign currencies of $11.0 million or 3.3% and organic decline of $5.8 million or 1.7%, partially offset by acquisitions of $6.2 million or 1.8%.

Segment Revenues for the three month period ended March 31, 2023 were $312.1 million, an increase of $14.7 million, or 4.9%, compared to $297.4 million in the same three month period in 2022. The increase in Segment Revenues was primarily due to higher pricing of $29.0 million or 9.8% and acquisitions of $7.1 million or 2.4%, partially offset by organic volume decline of $11.0 million or 3.7% and unfavorable impact of foreign currencies of $10.4 million or 3.5%. The percentage of Segment Revenues derived from aftermarket parts and service was 21.4% in the three month period ended March 31, 2023 compared to 19.6% in the same three month period in 2022.

Segment Adjusted EBITDA for the three month period ended March 31, 2023 was $94.5 million, an increase of $9.4 million, or 11.0%, from $85.1 million in the same three month period in 2022. Segment Adjusted EBITDA Margin increased 170 basis points to 30.3% from 28.6% in 2022. The increase in Segment Adjusted EBITDA was primarily due to higher pricing of $29.0 million or 34.1% and acquisitions of $2.7 million or 3.2%, partially offset by unfavorable cost inflation and product mix of $11.9 million or 14.0%, lower organic sales volume of $4.9 million or 5.8%, higher selling and administrative costs of $3.5 million or 4.1% and unfavorable impact of foreign currencies of $3.1 million or 3.6%.

Results of Discontinued Operations

Loss from discontinued operations, net of tax was $1.4 million for the three month period ended March 31, 2022 and consisted primarily of 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 March 31, 2023, 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, 2022 and Note 10 “Debt” and Note 21 “Subsequent Event” to our unaudited condensed consolidated financial statements included elsewhere in this Form 10-Q.

As of March 31, 2023, 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.

			March 31, 2023						December 31, 2022
Cash and cash equivalents			$	1,119.3					$	1,613.0
Short-term borrowings and current maturities of long-term debt			$	33.9					$	36.5
Long-term debt			2,708.8						2,716.1
Total debt			$	2,742.7					$	2,752.6

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, 2022 and Note 10 “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 of 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 March 31, 2023 was $52.9 million which primarily consisted of withholding taxes.

Working Capital

			March 31, 2023						December 31, 2022
Net Working Capital:
Current assets			$	3,672.4					$	3,967.3
Less: Current liabilities			1,700.1						1,674.0
Net working capital			$	1,972.3					$	2,293.3
Operating Working Capital:
Accounts receivable			$	1,243.6					$	1,122.0
Plus: Inventories (excluding LIFO reserve)			1,190.9						1,085.9
Plus: Contract assets			44.4						70.6
Less: Accounts payable			730.9						778.7
Less: Contract liabilities (current)			350.8						305.6
Operating working capital			$	1,397.2					$	1,194.2

Net working capital decreased $321.0 million to $1,972.3 million as of March 31, 2023 from $2,293.3 million as of December 31, 2022. Operating working capital increased $203.0 million to $1,397.2 million as of March 31, 2023 from $1,194.2 million as of December 31, 2022. The increase in operating working capital is primarily due to higher accounts receivable, higher inventories and lower accounts payable, partially offset by higher contract liabilities and lower contract assets.

The increase in accounts receivable was primarily due to the timing of revenues in the quarter and seasonal changes in collection timing. The increase in inventories was primarily due to additions to inventory due to increased demand for certain products. The decrease in contract assets was primarily due to the timing of revenue recognition and billing on our overtime contracts. The decrease 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 three month periods ended March 31, 2023 and 2022, respectively.

			For the Three Month Period Ended March 31,
			2023						2022
Cash flows provided by (used in) continuing operations:
Cash flows provided by operating activities			$	170.3					$	50.1
Cash flows used in investing activities			(581.5)						(48.2)
Cash flows used in financing activities			(89.3)						(116.1)
Net cash provided by (used in) discontinued operations			—						(4.1)
Free cash flow(1)			147.9						32.2

(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 $120.2 million to $170.3 million for the three month period ended March 31, 2023 from $50.1 million in the same three month period in 2022. This increase is primarily attributable to higher income from continuing operations, partially offset by cash outflows for operating working capital.

Investing Activities

Cash used in investing activities included capital expenditures of $22.4 million and $17.9 million for the three month periods ended March 31, 2023 and 2022, respectively. Net cash paid in acquisitions was $566.4 million and $30.3 million in the three month periods ended March 31, 2023 and 2022, respectively. The three month period ended March 31, 2023 also included proceeds of $7.3 million related to the sale of a closed facility.

Financing Activities

Cash used in financing activities of $89.3 million for the three month period ended March 31, 2023 primarily reflected purchases of treasury stock of $77.0 million, repayments of long term debt of $11.0 million and cash dividends on common stock of $8.1 million, partially offset by proceeds from stock option exercises of $9.2 million.

Cash used in financing activities of $116.1 million for the three month period ended March 31, 2022 primarily reflected purchases of treasury stock of $101.1 million, repayments of long-term debt of $9.6 million, and cash dividends on common stock of $8.2 million, partially offset by proceeds from stock option exercises of $4.6 million.

Discontinued Operations

Cash used in discontinued operations was $4.1 million for the three month period ended March 31, 2022 and related primarily to separation related expenses.

Free Cash Flow

Free cash flow increased $115.7 million to $147.9 million in the three month period ended March 31, 2023 from $32.2 million in the same three month period in 2022 due to increased cash provided by operating activities, partially offset by higher capital expenditures.

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, 2022.

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 18 “Contingencies” to the condensed consolidated financial statements included elsewhere in this Form 10-Q. We believe that as of March 31, 2023, 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, 2022.

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.

We are exposed to interest rate risk as a result of our variable-rate borrowings. We manage our exposure to interest rate risk by using interest rate swap and cap contracts, from time to time, as cash flow hedges of our variable rate debt in order to adjust the relative fixed and variable portions.

In addition, we are exposed to foreign currency risks that arise from our global business operations. Changes in foreign currency exchange rates affect the translation of local currency balances of foreign subsidiaries, transaction gains and losses associated with intercompany loans with foreign subsidiaries and transactions denominated in currencies other than a subsidiary’s functional currency. While future changes in foreign currency exchange rates are difficult to predict, our revenues and earnings may be adversely affected if the U.S. dollar further strengthens.

We seek to minimize our exposure to foreign currency risks through a combination of normal operating activities, including by conducting our international business operations primarily in their functional currencies to match expenses with revenues, and the use of cross currency interest rate swap contracts and foreign currency forward exchange contracts. In addition, to mitigate the risk arising from entering into transactions in currencies other than our functional currencies, we typically settle intercompany trading balances at least quarterly.

As of March 31, 2023, there have been no material changes to our market risk assessment previously disclosed in the annual report on Form 10-K for the fiscal year ended December 31, 2022.

Disclosure Controls and Procedures

The Company maintains a set of disclosure controls and procedures as that term is defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), that are designed to ensure that information required to be disclosed by the Company in reports that it files or submits under the Exchange Act, is recorded, processed, summarized and reported within the time periods specified in Securities and Exchange Commission (“SEC”) rules and forms, and that such information is accumulated and communicated to the Company’s management, including its Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosures. The design of any disclosure controls and procedures is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Any controls and procedures, no matter how well designed and operated, can provide only reasonable, not absolute, assurance of achieving the desired control objectives. In accordance with Rule 13a-15(b) of the Exchange Act, as of the end of the period covered by this Quarterly Report on Form 10-Q, an evaluation was carried out under the supervision and with the participation of the Company’s management, including its Chief Executive Officer and Chief Financial Officer, of the effectiveness of its disclosure controls and procedures. Based on their evaluation, the Company’s Chief Executive Officer and Chief Financial Officer concluded that the Company’s disclosure controls and procedures, as of the end of the period covered by this Quarterly Report on Form 10-Q, were effective to provide reasonable assurance that information required to be disclosed by the Company in reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms and is accumulated and communicated to the Company’s management, including the Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.

Internal Control over Financial Reporting

There have not been any changes in our internal control over financial reporting (as such term is defined in Rule 13a-15(f) under the Exchange Act) during the fiscal quarter to which this report relates that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

The information set forth in Note 18 “Contingencies” to our Condensed Consolidated Financial Statements under Part I, Item 1 “Financial Statements,” is incorporated herein by reference.

As of March 31, 2023, there have been no material changes to our risk factors included in our annual report on Form 10-K for the year ended December 31, 2022.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

Company Purchases

The following table contains detail related to the repurchase of our common stock based on the date of trade during the three month period ended March 31, 2023.

2023 First Quarter Months			Total Number of Shares Purchased**(1)**						Average Price Paid Per Share**(2)**						Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs**(3)**						Maximum Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs**(3)**
January 1, 2023 - January 31, 2023			290,112						$	56.03					290,112						$	473,908,263
February 1, 2023 - February 28, 2023			632,655						$	57.05					417,703						$	448,157,893
March 1, 2023 - March 31, 2023			420,570						$	58.57					409,839						$	428,676,408
Total			1,343,337												1,117,654

(1)Includes shares of common stock surrendered to us to satisfy tax withholding obligations in connection with the vesting of certain restricted stock units, comprised of 214,952 shares in the period from February 1, 2023 to February 28, 2023 and 10,731 shares in the period from March 1, 2023 to March 31, 2023.

(2)The average price paid per share includes brokerage commissions.

(3)On August 24, 2021, our Board of Directors approved a share repurchase program which authorized the repurchase of up to $750.0 million of the Company's outstanding common stock. The authorization does not have any expiration date.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4. MINE SAFETY DISCLOSURES

Not applicable.

On April 27, 2023, the Company detected a cybersecurity incident that resulted in a disruption of several of our information technology systems. The Company immediately launched a thorough investigation with the assistance of external cybersecurity experts and is assessing and mitigating impacts of the incident. The Company proactively took immediate actions to maintain business continuity and to minimize disruption to operations and customers, including isolating systems and implementing workarounds. As of the date of the filing of this Quarterly Report on Form 10-Q, although an investigation is ongoing, the Company is not aware of any confidential customer information having been exfiltrated. If the Company becomes aware of any such information having been exfiltrated, it will make appropriate notifications.

The Company remains fully committed to its customers as it diligently works to resolve the issue and restore normal operations in a safe and secure manner. Security is a top priority for the Company, and the Company continues to take a series of measures to safeguard the integrity of its information technology systems. The Company continues to investigate and assess the incident and while the Company does not expect this incident to have a material impact on its business, results of operations or financial condition, it cannot determine, at this time the extent of the impact from such event or whether such impact will have a material adverse effect. For a discussion of the risks and uncertainties that cybersecurity incidents may have on us, see “Risk Factors: Information systems failure or disruption, due to cyber terrorism or other actions, may adversely impact our business and result in

financial loss to the Company or liability to our customers” in our Annual Report on Form 10-K for the fiscal year ended December 31, 2022 and “Special Note Regarding Forward-Looking Statements” in this Quarterly Report on Form 10-Q.

The following is a list of all exhibits filed or furnished as part of this report.

The agreements and other documents filed as exhibits to this report are not intended to provide factual information or other disclosures other than with respect to the terms of the agreements or other documents themselves, and you should not rely on them for that purpose. In particular, any representations and warranties made by us in these agreements or other documents were made solely within the specific context of the relevant agreement or document and may not describe the actual statement of affairs as of the date they were made or at any other time.

Exhibit No.						Description
10.1†						Employment Agreement, dated April 10, 2023, between Ingersoll Rand Inc. and Enrique Miñarro Viseras.
10.2						Joinder Agreement and Amendment No. 9 to Credit Agreement, dated as of April 21, 2023, by and among Ingersoll Rand Inc., Gardner Denver, Inc., Ingersoll-Rand Services Company, GD German Holdings II GmbH, Gardner Denver Holdings Ltd., Citibank, N.A., and the lenders and other parties party thereto.
31.1						Certification of Periodic Report by Chief Executive Officer under Section 302 of the Sarbanes-Oxley Act of 2002.
31.2						Certification of Periodic Report by Chief Financial Officer under Section 302 of the Sarbanes-Oxley Act of 2002.
32.1						Certification of Chief Executive Officer Pursuant to 18 U.S.C. Section 1350 as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2						Certification of Chief Financial Officer Pursuant to 18 U.S.C. Section 1350 as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101.INS						Inline XBRL Instance Document – the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.
101.SCH						Inline XBRL Taxonomy Extension Scheme Document.
101.CAL						Inline XBRL Taxonomy Extension Calculation Linkbase Document.
101.DEF						Inline XBRL Taxonomy Extension Definition Linkbase Document.
101.LAB						Inline XBRL Taxonomy Extension Label Linkbase Document.
101.PRE						Inline XBRL Taxonomy Extension Presentation Linkbase Document.
104						Cover Page Interactive Data File (Embedded within the Inline XBRL document and included in Exhibit 101).

† Identifies exhibits that consists of a management contract or compensatory plan or arrangement.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

Date: May 5, 2023			INGERSOLL RAND INC.
			By:			/s/ Michael J. Scheske
			Name: Michael J. Scheske
			Vice President and Chief Accounting Officer (Principal Accounting Officer)