Item 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

INGERSOLL RAND INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited; in millions, except per share amounts)

			For the Three Month Period Ended 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			648.8						624.4
Goodwill			6,385.9						6,064.2
Other intangible assets, net			3,739.1						3,578.6
Deferred tax assets			23.5						22.3
Other assets			525.3						509.1
Total assets			$	14,995.0					$	14,765.9
Liabilities and Stockholders’ Equity
Current liabilities:
Short-term borrowings and current maturities of long-term debt			$	33.9					$	36.5
Accounts payable			730.9						778.7
Accrued liabilities			935.3						858.8
Total current liabilities			1,700.1						1,674.0
Long-term debt, less current maturities			2,708.8						2,716.1
Pensions and other postretirement benefits			145.9						147.2
Deferred income taxes			677.1						610.6
Other liabilities			381.4						360.8
Total liabilities			$	5,613.3					$	5,508.7
Commitments and contingencies (Note 18)			—						—
Stockholders’ equity
Common stock, $0.01 par value; 1,000,000,000 shares authorized; 427,478,622 and 426,327,805 shares issued as of March 31, 2023 and December 31, 2022, respectively			4.3						4.3
Capital in excess of par value			9,493.6						9,476.8
Retained earnings			1,103.9						950.9
Accumulated other comprehensive loss			(226.4)						(251.7)
Treasury stock at cost; 22,482,040 and 21,210,095 shares as of March 31, 2023 and December 31, 2022, respectively			(1,058.1)						(984.5)
Total Ingersoll Rand Inc. stockholders’ equity			$	9,317.3					$	9,195.8
Noncontrolling interests			64.4						61.4
Total stockholders’ equity			$	9,381.7					$	9,257.2
Total liabilities and stockholders’ equity			$	14,995.0					$	14,765.9

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

INGERSOLL RAND INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(Unaudited; in millions)

			Three Month Period Ended March 31, 2023
			Common Stock												Capital in Excess of Par Value						Retained Earnings						Accumulated Other Comprehensive Loss						Treasury Stock						Total Ingersoll Rand Inc. Stockholders' Equity						Noncontrolling Interests						Total Equity
			Shares Issued						Par
Balance at beginning of period			426.3						$	4.3					$	9,476.8					$	950.9					$	(251.7)					$	(984.5)					$	9,195.8					$	61.4					$	9,257.2
Net income			—						—						—						161.1						—						—						161.1						2.1						163.2
Dividends declared			—						—						—						(8.1)						—						—						(8.1)						—						(8.1)
Issuance of common stock for stock-based compensation plans			1.2						—						8.7						—						—						—						8.7						—						8.7
Purchases of treasury stock			—						—						—						—						—						(77.0)						(77.0)						—						(77.0)
Issuance of treasury stock for stock-based compensation plans			—						—						(3.3)						—						—						3.4						0.1						—						0.1
Stock-based compensation			—						—						11.4						—						—						—						11.4						—						11.4
Other comprehensive income, net of tax			—						—						—						—						25.3						—						25.3						0.9						26.2
Balance at end of period			427.5						$	4.3					$	9,493.6					$	1,103.9					$	(226.4)					$	(1,058.1)					$	9,317.3					$	64.4					$	9,381.7

			Three Month Period Ended March 31, 2022
			Common Stock												Capital in Excess of Par Value						Retained Earnings						Accumulated Other Comprehensive Loss						Treasury Stock						Total Ingersoll Rand Inc. Stockholders' Equity						Noncontrolling Interests						Total Equity
			Shares Issued						Par
Balance at beginning of period			423.8						$	4.3					$	9,408.6					$	378.6					$	(41.6)					$	(748.4)					$	9,001.5					$	69.7					$	9,071.2
Net income			—						—						—						103.7						—						—						103.7						0.8						104.5
Dividends declared			—						—						—						(8.2)						—						—						(8.2)						—						(8.2)
Issuance of common stock for stock-based compensation plans			0.7						—						4.5						—						—						—						4.5						—						4.5
Purchases of treasury stock			—						—						—						—						—						(101.1)						(101.1)						—						(101.1)
Issuance of treasury stock for stock-based compensation plans			—						—						(2.0)						—						—						2.7						0.7						—						0.7
Stock-based compensation			—						—						21.0						—						—						—						21.0						—						21.0
Other comprehensive income (loss), net of tax			—						—						—						—						(29.9)						—						(29.9)						0.6						(29.3)
Balance at end of period			424.5						$	4.3					$	9,432.1					$	474.1					$	(71.5)					$	(846.8)					$	8,992.2					$	71.1					$	9,063.3

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

INGERSOLL RAND INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited; in millions)

			For the Three Month Period Ended March 31,
			2023						2022
Cash Flows From Operating Activities From Continuing Operations:
Net income			$	163.2					$	104.5
Loss from discontinued operations, net of tax			—						(1.4)
Income from continuing operations			163.2						105.9
Adjustments to reconcile income from continuing operations to net cash provided by operating activities from continuing operations:
Amortization of intangible assets			92.4						86.2
Depreciation			21.6						22.3
Non-cash restructuring charges			0.9						2.2
Stock-based compensation expense			12.1						19.8
Loss (income) on equity method investments			(0.3)						4.3
Foreign currency transaction losses (gains), net			1.0						(3.8)
Non-cash adjustments to carrying value of LIFO inventories			7.8						—
Other non-cash adjustments			2.9						2.0
Changes in assets and liabilities:
Receivables			(83.7)						(67.7)
Inventories			(45.3)						(99.4)
Accounts payable			(70.6)						41.0
Accrued liabilities			56.5						(37.8)
Other assets and liabilities, net			11.8						(24.9)
Net cash provided by operating activities from continuing operations			170.3						50.1
Cash Flows From Investing Activities From Continuing Operations:
Capital expenditures			(22.4)						(17.9)
Net cash paid in acquisitions			(566.4)						(30.3)
Disposals of property, plant and equipment			7.3						—
Net cash used in investing activities from continuing operations			(581.5)						(48.2)
Cash Flows From Financing Activities From Continuing Operations:
Principal payments on long-term debt			(11.0)						(9.6)
Purchases of treasury stock			(77.0)						(101.1)
Cash dividends on common shares			(8.1)						(8.2)
Proceeds from stock option exercises			9.2						4.6
Payments of deferred and contingent acquisition consideration			(1.9)						(1.8)
Other financing			(0.5)						—
Net cash used in financing activities from continuing operations			(89.3)						(116.1)
Cash Flows From Discontinued Operations:
Net cash used in operating activities			—						(4.1)
Net cash used in discontinued operations			—						(4.1)
Effect of exchange rate changes on cash and cash equivalents			6.8						(1.1)
Net decrease in cash and cash equivalents			(493.7)						(119.4)
Cash and cash equivalents, beginning of period			1,613.0						2,109.6
Cash and cash equivalents, end of period			$	1,119.3					$	1,990.2
Supplemental Cash Flow Information
Cash paid for income taxes			$	19.1					$	29.1
Cash paid for interest			36.1						17.1

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

INGERSOLL RAND INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

Note 1. Basis of Presentation and Recent Accounting Pronouncements

Basis of Presentation

Ingersoll Rand Inc. is a diversified, global provider of mission-critical flow creation products and industrial solutions. The accompanying condensed consolidated financial statements include the accounts of Ingersoll Rand Inc. and its majority-owned subsidiaries (collectively referred to herein as “Ingersoll Rand” or the “Company”).

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) for interim financial reporting, the instructions for Form 10-Q and Article 10 of the U.S. Securities and Exchange Commission (“SEC”) Regulation S-X. In the Company’s opinion, the condensed consolidated financial statements reflect all adjustments of a normal recurring nature necessary for a fair statement of the results for the interim periods presented. The condensed consolidated financial statements should be read in conjunction with the Company’s audited consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2022 (“2022 Form 10-K”). Unless otherwise indicated, amounts provided in these Notes pertain to continuing operations. See Note 2 “Discontinued Operations” for information on discontinued operations.

The results of operations for the three month period ended March 31, 2023 are not necessarily indicative of future results.

Recently Adopted Accounting Standard Updates (“ASU”)

In October 2021, the Financial Accounting Standards Board (the “FASB”) issued ASU 2021-08, Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers, which requires an entity to recognize and measure contract assets and contract liabilities acquired in a business combination in accordance with Topic 606. The amendments in this update were effective for fiscal years beginning after December 15, 2022 for public companies. The Company adopted this guidance on January 1, 2023 and applies the guidance prospectively to business combinations completed after this date. The adoption did not have a material impact on our consolidated financial statements.

Supply Chain Finance Program

The Company has adopted ASU 2022-04, Liabilities - Supplier Finance Programs (Subtopic 405-50): Disclosure of Supplier Finance Program Obligations, which requires the following disclosures about supplier finance programs. This adoption had no impact on the Company’s financial position, results of operations or cash flows.

The Company has entered into an agreement with a financial institution to facilitate a supply chain finance program (the “SCF Program”). Under the SCF Program, qualifying suppliers may elect to sell their receivables from the Company to the financial institution. Participating suppliers negotiate arrangements for sale of their receivables directly with the financial institution, and the terms of the Company’s payment obligations are not impacted by a supplier’s participation in the SCF Program. Once a qualifying supplier elects to participate in the SCF Program and reaches an agreement with the financial institution, the supplier elects which individual Company invoices they sell to the financial institution. However, all of the Company’s payments to participating suppliers are paid to the financial institution on the invoice due date, regardless of whether the individual invoice is sold by the supplier to the financial institution. The Company has not pledged any assets as security or provided other forms of guarantees. All outstanding amounts related to suppliers participating in the SCF Program are recorded within “Accounts payable” in our Condensed Consolidated Balance Sheets, and the associated payments are included in “Net cash provided by operating activities from continuing operations” within our Condensed Consolidated Statements of Cash Flows. Included in “Accounts payable” in the Condensed Consolidated Balance Sheets as of March 31, 2023 and December 31, 2022 were $17.3 million and $9.7 million of outstanding payment obligations, respectively, that were sold to the financial institution by participating suppliers.

Note 2. Discontinued Operations

Discontinued operations consists of two formerly-owned businesses: Specialty Vehicle Technologies (“SVT” or “Club Car”) and High Pressure Solutions (“HPS”). The results of operations, financial positions and cash flows of these businesses are reported as discontinued operations for all periods presented in these condensed consolidated financial statements.

Specialty Vehicle Technologies

On April 9, 2021, the Company entered into an agreement to sell Club Car to private equity firm Platinum Equity Advisors, LLC (“Platinum Equity”) for $1.68 billion in cash. The sale was substantially completed on June 1, 2021 and concluded in the third quarter of 2022.

High Pressure Solutions

On February 14, 2021, the Company entered into an agreement to sell the majority interest in its High Pressure Solutions business to private equity firm American Industrial Partners. The Company received net cash proceeds of $278.3 million for its majority interest of 55%, and retained a 45% common equity interest in the newly-formed entity comprising the HPS business. This sale was substantially completed on April 1, 2021. The Company expects to maintain its minority investment in HPS indefinitely and is unable to estimate when this interest may be disposed.

Financial information 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.

Note 3. Acquisitions

Acquisitions in 2023

On January 3, 2023, the Company completed the acquisition of SPX FLOW’s Air Treatment business (“Air Treatment”) for cash consideration of $519.0 million, subject to customary post-closing purchase price adjustments. The business is a manufacturer of desiccant and refrigerated dryers, filtration systems and purifiers for dehydration in compressed air. The acquisition is intended to expand the Company’s offerings of compressor system components through globally recognized brands. The Air Treatment business will be reported within the Industrial Technologies and Services segment.

The following table summarizes the preliminary allocation of consideration to the fair values of identifiable assets acquired and liabilities assumed in the Air Treatment business transaction. The goodwill arising from the acquisition is attributable to revenue and cost synergies, anticipated growth of new and existing customers, and the assembled workforce. None of this goodwill is expected to be deductible for tax purposes.

			Fair Value
Accounts receivable			$	26.1
Inventories			43.9
Other current assets			2.2
Property, plant and equipment			18.4
Goodwill			273.7
Other intangible assets			242.1
Other assets			10.9
Total current liabilities			(35.0)
Deferred tax liabilities			(56.4)
Other noncurrent liabilities			(6.9)
Total consideration			$	519.0

On February 1, 2023, the Company acquired Paragon Tank Truck Equipment (“Paragon”), a provider of solutions used for loading and unloading dry bulk and liquid tanks on and off of trucks, for cash consideration of $42.3 million. Paragon has been reported within the Industrial Technologies and Services segment.

The aggregate revenue and operating income included in the condensed consolidated financial statements for these acquisitions subsequent to the dates of acquisition was $48.4 million and $3.2 million for the three month period ended March 31, 2023, respectively. The operating income of these acquired businesses includes the effects of acquisition-related accounting adjustments such as amortization of intangible assets and fair value adjustments to acquired inventory.

Acquisitions in 2022

On February 1, 2022, the Company acquired Houdstermaatschappij Jorc B.V. (“Jorc”), a manufacturer of condensate management products, for aggregate cash consideration of $30.2 million. Jorc has been reported in the Industrial Technologies and Services segment from the date of acquisition.

On September 1, 2022, the Company acquired Westwood Technical Limited (“Westwood Technical”), a control and instrumentation specialist based in the United Kingdom with unique Industrial Internet of Things (IIoT) capabilities, for aggregate cash consideration of $8.1 million and contingent consideration of up to $9.3 million. Westwood Technical has been reported in the Precision and Science Technologies segment from the date of acquisition.

On September 1, 2022, the Company acquired Holtec Gas Systems LLC (“Holtec”), a nitrogen generator manufacturer, for cash consideration of $13.0 million. Holtec has been reported in the Industrial Technologies and Services segment from the date of acquisition.

On September 1, 2022, the Company acquired Hydro Prokav Pumps (India) Private Limited (“Hydro Prokav”) for cash consideration of $14.0 million. Hydro Prokav has been reported in the Precision and Science Technologies segment from the date of acquisition.

On October 1, 2022, the Company acquired Dosatron International L.L.C (“Dosatron International”), a technology solutions provider of water powered dosing pumps and systems, for cash consideration of $89.5 million and contingent consideration of up to $14.7 million. Dosatron International has been reported in the Precision and Science Technologies segment from the date of acquisition.

On November 1, 2022, the Company acquired Pedro Gil Construcciones Mecanicas, S.L. (“Pedro Gil”), a manufacturer of positive displacement blowers, pumps and vacuum systems in the Spanish market, for aggregate cash consideration of $17.9 million. Pedro Gil has been reported in the Industrial Technologies and Services segment from the date of acquisition.

On December 1, 2022, the Company acquired Everest Blowers Private Limited and Everest Blower Systems Private Limited (collectively, “Everest Group”), an Indian market leader for customized blower and vacuum pump solutions, for $75.3 million aggregate cash consideration and estimated contingent consideration of $12.1 million. Everest Group has been reported in the Industrial Technologies and Services segment from the date of acquisition.

Other acquisitions completed during the year ended December 31, 2022 include multiple sales and service businesses and a manufacturer in the Industrial Technologies and Services segment. The aggregate consideration for these acquisitions was $20.0 million.

The following table summarizes the allocation of consideration for all businesses acquired in 2022 to the fair values of identifiable assets acquired and liabilities assumed at the acquisition dates. Initial accounting for all 2022 acquisitions is substantially complete.

			Dosatron International						All Others						Total
Accounts receivable			$	1.8					$	16.3					$	18.1
Inventories			6.2						20.7						26.9
Other current assets			0.1						1.3						1.4
Property, plant and equipment			0.3						8.9						9.2
Goodwill			57.4						151.1						208.5
Other intangible assets			41.9						43.0						84.9
Other assets			13.8						0.9						14.7
Total current liabilities			(3.5)						(30.7)						(34.2)
Deferred tax liabilities			(13.8)						(9.7)						(23.5)
Other noncurrent liabilities			—						(1.9)						(1.9)
Total consideration			$	104.2					$	199.9					$	304.1

The revenues included in the condensed consolidated financial statements for these acquisitions subsequent to their date of acquisition was $33.4 million and $4.0 million for the three month periods ended March 31, 2023 and 2022, respectively. The operating income included in the condensed consolidated financial statements for these acquisitions subsequent to their date of acquisition was $5.4 million and $0.7 million for the three month periods ended March 31, 2023 and 2022, respectively. The

operating income of these acquired businesses include the effects of acquisition-related accounting adjustments such as amortization of intangible assets and fair value adjustments to acquired inventory.

Note 4. Restructuring

2023 Actions

In 2023, the Company executed restructuring actions to optimize our footprint and cost structure. Charges include workforce restructuring, facility consolidation and other exit and disposal costs. We continue to review our cost structure in the context of footprint, recent acquisitions, and the macroeconomic environment which may result in further restructuring actions throughout the year. Through March 31, 2023, we have recognized expense of $1.1 million within Industrial Technologies and Services related to the 2023 actions.

Prior Year Actions

Subsequent to the acquisition of and merger with the Industrial business of Ingersoll-Rand plc (“Ingersoll Rand Industrial”) in 2020 (the “Merger”), the Company announced a restructuring program (“2020 Plan”) to create efficiencies and synergies, reduce the number of facilities and optimize operating margin within the merged Company. Through March 31, 2023, we have recognized cumulative expense related to the 2020 Plan of $127.5 million, comprising $100.8 million, $15.2 million and $11.5 million for Industrial Technologies and Services, Precision and Science Technologies and Corporate, respectively. The Company expects to complete all actions by the end of 2023, and total expense for workforce restructuring, facility consolidation and other exit and disposal activities under the 2020 Plan to be approximately $128 million to $138 million.

For the three month periods ended March 31, 2023 and 2022, “Restructuring charges, net” were recognized within “Other operating expense, net” in the Condensed Consolidated Statement of Operations and consisted of the following.

			For the Three Month Period Ended March 31,
			2023						2022
Industrial Technologies and Services			$	3.1					$	3.6
Precision and Science Technologies			(0.4)						7.6
Corporate			0.2						1.3
Restructuring charges, net			$	2.9					$	12.5

The following table summarizes the activity associated with the Company’s restructuring programs for the three month periods ended March 31, 2023 and 2022.

			For the Three Month Period Ended March 31,
			2023						2022
Balance at beginning of period			$	14.9					$	12.3
Charged to expense - termination benefits			0.9						8.3
Charged to expense - other (1)			1.1						2.0
Payments			(3.6)						(4.9)
Currency translation adjustment and other			0.1						(0.8)
Balance at end of period			$	13.4					$	16.9

(1)Excludes $0.9 million and $2.2 million of non-cash charges that impacted restructuring expense but not the restructuring liabilities during the three month periods ended March 31, 2023 and 2022, respectively.

Note 5. Allowance for Credit Losses

The allowance for credit losses for the three month periods ended March 31, 2023 and 2022 consisted of the following.

			For the Three Month Period Ended March 31,
			2023						2022
Balance at beginning of the period			$	47.2					$	42.3
Provision charged to expense			4.0						2.0
Write-offs, net of recoveries			(0.4)						(0.5)
Foreign currency translation and other			0.2						(0.1)
Balance at end of the period			$	51.0					$	43.7

Note 6. Inventories

Inventories as of March 31, 2023 and December 31, 2022 consisted of the following.

			March 31, 2023						December 31, 2022
Raw materials, including parts and subassemblies			$	685.8					$	625.0
Work-in-process			139.9						122.2
Finished goods			365.2						338.7
			1,190.9						1,085.9
LIFO reserve			(68.3)						(60.5)
Inventories			$	1,122.6					$	1,025.4

Note 7. Goodwill and Other Intangible Assets

Goodwill

The changes in the carrying amount of goodwill attributable to each reportable segment for the three month period ended March 31, 2023 is presented in the table below.

			Industrial Technologies and Services						Precision and Science Technologies																		Total
Balance at beginning of period			$	4,222.5					$	1,841.7																	$	6,064.2
Acquisitions			301.7						—																		301.7
Foreign currency translation and other(1)			12.3						7.7																		20.0
Balance at end of period			$	4,536.5					$	1,849.4																	$	6,385.9

(1)Includes measurement period adjustments

As of both March 31, 2023 and December 31, 2022, goodwill included accumulated impairment losses of $220.6 million within the Industrial Technologies and Services segment.

Other Intangible Assets, Net

Other intangible assets as of March 31, 2023 and December 31, 2022 consisted of the following.

			March 31, 2023																		December 31, 2022
			Gross Carrying Amount						Accumulated Amortization						Net Carrying Amount						Gross Carrying Amount						Accumulated Amortization						Net Carrying Amount
Amortized intangible assets
Customer lists and relationships			$	3,205.7					$	(1,365.1)					$	1,840.6					$	3,029.0					$	(1,286.1)					$	1,742.9
Technology			376.0						(138.2)						237.8						360.0						(124.5)						235.5
Tradenames			51.6						(24.1)						27.5						46.2						(22.7)						23.5
Backlog			8.0						(2.7)						5.3						1.0						(0.3)						0.7
Other			115.6						(97.1)						18.5						113.7						(93.2)						20.5
Unamortized intangible assets
Tradenames			1,609.4						—						1,609.4						1,555.5						—						1,555.5
Total other intangible assets			$	5,366.3					$	(1,627.2)					$	3,739.1					$	5,105.4					$	(1,526.8)					$	3,578.6

Intangible Asset Impairment Considerations

As of March 31, 2023 and December 31, 2022, there were no indications that the carrying value of goodwill and other intangible assets may not be recoverable.

Note 8. Accrued Liabilities

Accrued liabilities as of March 31, 2023 and December 31, 2022 consisted of the following.

			March 31, 2023						December 31, 2022
Salaries, wages and related fringe benefits			$	223.9					$	223.3
Contract liabilities			350.8						305.6
Product warranty			54.1						46.2
Operating lease liabilities			41.3						39.6
Restructuring			13.4						14.9
Taxes			80.6						63.3
Other			171.2						165.9
Total accrued liabilities			$	935.3					$	858.8

A reconciliation of the changes in the accrued product warranty liability for the three month periods ended March 31, 2023 and 2022 are as follows.

			For the Three Month Period Ended March 31,
			2023						2022
Balance at beginning of period			$	46.2					$	42.5
Product warranty accruals			8.9						4.2
Acquired warranty			1.4						—
Settlements			(3.9)						(3.8)
Foreign currency translation and other			1.5						(0.4)
Balance at end of period			$	54.1					$	42.5

Note 9. Benefit Plans

Net Periodic Benefit Cost

The following table summarizes the components of net periodic benefit cost for the Company’s defined benefit pension plans and other postretirement benefit plans recognized for the three month periods ended March 31, 2023 and 2022.

			Pension Benefits																								Other Postretirement Benefits
			U.S. Plans												Non-U.S. Plans
			For the Three Month Period Ended March 31,
			2023						2022						2023						2022						2023						2022
Service cost			$	—					$	1.1					$	0.6					$	0.9					$	—					$	—
Interest cost			4.0						2.8						2.7						1.6						0.2						0.2
Expected return on plan assets			(3.3)						(3.2)						(2.7)						(3.2)						—						—
Recognition of:
Unrecognized net actuarial loss			—						—						(0.4)						0.1						(0.1)						—
			0.7						0.7						0.2						(0.6)						0.1						0.2
Gain on settlement			—						(0.9)						—						—						—						—
			$	0.7					$	(0.2)					$	0.2					$	(0.6)					$	0.1					$	0.2

The components of net periodic benefit cost other than the service cost component are included in “Other income, net” in the Condensed Consolidated Statements of Operations.

Note 10. Debt

Debt as of March 31, 2023 and December 31, 2022 is summarized as follows.

			March 31, 2023						December 31, 2022
Short-term borrowings			$	3.8					$	4.5
Long-term debt:
Dollar Term Loan B, due 2027(1)			1,841.7						1,846.3
Dollar Term Loan, due 2027(2)			899.1						901.4
Finance leases and other long-term debt			18.2						22.2
Unamortized debt issuance costs			(20.1)						(21.8)
Total long-term debt, net, including current maturities			2,738.9						2,748.1
Current maturities of long-term debt			30.1						32.0
Total long-term debt, net			$	2,708.8					$	2,716.1

(1)As of March 31, 2023, this amount is presented net of unamortized discounts of $1.3 million. As of March 31, 2023, the applicable interest rate was approximately 6.47% and the weighted-average interest rate was 6.35% for the three month period ended March 31, 2023.

(2)As of March 31, 2023, this amount is presented net of unamortized discounts of $0.7 million. As of March 31, 2023, the applicable interest rate was approximately 6.47% and the weighted average interest rate was 6.35% for the three month period ended March 31, 2023.

Senior Secured Credit Facilities

The Senior Secured Credit Facilities provided senior secured financing consisting of (i) a senior secured term loan facility denominated in U.S. dollars (as refinanced and otherwise modified from time to time prior to February 28, 2020, the “Original Dollar Term Loan”), (ii) a senior secured term loan facility denominated in U.S. dollars (entered into at the time of the Merger, the “Dollar Term Loan B”), and (iii) a senior secured revolving credit facility (as refinanced and otherwise modified from time to time the “Revolving Credit Facility”). The Revolving Credit Facility is available to be drawn in U.S. dollars (“USD”), Euros (“EUR”), Great British Pounds (“GBP”) and other reasonably accepted foreign currencies, subject to certain sublimits for the foreign currencies.

See Note 11 “Debt” to the consolidated financial statements in the Company’s annual report on Form 10-K for the year ended December 31, 2022 for further information on the Senior Secured Credit Facilities.

As of March 31, 2023, the aggregate amount of commitments under the Revolving Credit Facility was $1,100.0 million and the capacity under the Revolving Credit Facility to issue letters of credit was $400.0 million. As of March 31, 2023, the Company had no outstanding borrowings under the Revolving Credit Facility, no outstanding letters of credit under the Revolving Credit Facility and unused availability under the Revolving Credit Facility of $1,100.0 million. See Note 21 “Subsequent Event” regarding Amendment No. 9 to the Credit Agreement.

As of March 31, 2023, we were in compliance with all covenants of our Senior Secured Credit Facilities.

Note 11. Stock-Based Compensation Plans

The Company has outstanding stock-based compensation awards granted under the 2013 Stock Incentive Plan (“2013 Plan”) and the 2017 Omnibus Incentive Plan (as amended by the First Amendment, dated April 27, 2021, “2017 Plan”) as described in Note 18, “Stock-Based Compensation Plans” to the consolidated financial statements in its 2022 Form 10-K.

The Company’s stock-based compensation awards are generally granted in the first quarter of the year and consist of stock options, restricted stock units and performance share units. Eligible employees were also granted restricted stock units, during the three month period ended September 30, 2020, that vest ratably over two years, subject to the passage of time and the employee's continued employment during such period. In some instances, such as death, awards may vest concurrently with or following an employee's termination.

Stock-Based Compensation

For the three month periods ended March 31, 2023 and 2022, the Company recognized stock-based compensation expense of $12.1 million and $19.8 million, respectively. These costs are included in “Cost of sales” and “Selling and administrative expenses” in the Condensed Consolidated Statements of Operations.

In the three month period ended March 31, 2023, the $12.1 million of stock-based compensation expense included expense for equity awards granted under the 2013 and 2017 Plan of $11.4 million and an increase in the liability for stock appreciation rights (“SAR”) of $0.7 million.

As of March 31, 2023, there was $151.8 million of total unrecognized compensation expense related to outstanding stock options, restricted stock unit awards and performance stock unit awards granted to employees and non-employee directors, as well as 400,000 conditional stock options awarded during the third quarter of 2022 to our Chairman and CEO in which the service date precedes the grant date, and will be granted upon achievement of certain performance targets. These 400,000 stock options have not been included in the Stock Option Awards section below since the grant date has not occurred.

Stock Option Awards

Stock options are granted to employees with an exercise price equal to the fair value of the Company’s per share common stock on the date of grant. Stock option awards typically vest over four or five years and expire ten years from the date of grant.

A summary of the Company’s stock option (including SARs) activity for the three month period ended March 31, 2023 is presented in the following table (underlying shares in thousands).

			Shares						Weighted-Average Exercise Price (per share)
Stock options outstanding as of December 31, 2022			6,383						$	25.22
Granted			741						57.89
Exercised or settled			(457)						20.49
Forfeited			(31)						42.87
Expired			—						53.09
Stock options outstanding as of March 31, 2023			6,636						29.11
Vested as of March 31, 2023			4,798						21.14

The following assumptions were used to estimate the fair value of options granted during the three month periods ended March 31, 2023 and 2022 using the Black-Scholes option-pricing model.

			For the Three Month Period Ended March 31,
Assumptions			2023						2022
Expected life of options (in years)			6.3 - 7.5						6.3
Risk-free interest rate			4.0% - 4.1%						1.9%
Assumed volatility			36.6%						38.3%
Expected dividend rate			0.1		%				0.2		%

Restricted Stock Unit Awards

Restricted stock units are granted to employees and non-employee directors based on the market price of the Company’s common stock on the grant date and recognized in compensation expense over the vesting period. A summary of the Company’s restricted stock unit activity for the three month period ended March 31, 2023 is presented in the following table (underlying shares in thousands).

			Shares						Weighted-Average Grant-Date Fair Value
Non-vested as of December 31, 2022			1,005						$	43.50
Granted			377						57.89
Vested			(340)						37.36
Forfeited			(20)						46.71
Non-vested as of March 31, 2023			1,022						50.79

Performance Share Unit (“PSUs”) Awards

Annually, during the first quarter, the Company grants TSR PSUs to certain officers in which the number of shares issued at the end of the performance period is determined by the Company’s total shareholder return percentile rank versus the S&P 500 index for the three year performance period. The grant date fair value of these awards is determined using a Monte Carlo simulation pricing model and compensation cost is recognized straight-line over a three year period.

During the third quarter of 2022, the Company granted Special TSR PSUs to its Chairman and CEO that will become earned (but not vested) on the first date during the five year performance period on which the sum of (i) the 60-day volume-weighted average closing price of the Company’s common stock, plus (ii) the cumulative value of any dividends paid during the five year performance period equals or exceeds $81.85. The grant date fair value of these awards is determined using a Monte Carlo simulation pricing model and compensation cost is recognized straight-line over a five year period. The Company also granted its Chairman and CEO Special EPS PSUs that are eligible to vest based on the level of compounded annual growth rate of the Company’s Adjusted EPS during the five year performance period. The grant date fair value of these awards is based on the market price of the Company’s common stock on the grant date and recognized as a compensation expense over a 4.3 year period.

A summary of the Company’s performance stock unit activity for the three month period ended March 31, 2023 is presented in the following table (underlying shares in thousands).

			Shares						Weighted-Average Grant-Date Fair Value
Non-vested as of December 31, 2022			1,539						$	44.99
Granted			149						75.52
Change in units based on performance			222						29.72
Vested			(444)						29.72
Forfeited			(17)						59.67
Non-vested as of March 31, 2023			1,449						50.29

The following assumptions were used to estimate the fair value of performance share units granted during the three month periods ended March 31, 2023 and 2022 using the Monte Carlo simulation pricing model.

			For the Three Month Period Ended March 31,
Assumptions			2023						2022
Expected term (in years)			2.9						2.9
Risk-free interest rate			4.4%						1.7		%
Assumed volatility			31.8%						36.4		%
Expected dividend rate			0.1		%				0.2		%

Note 12. Accumulated Other Comprehensive Loss

The Company’s other comprehensive income (loss) consists of (i) unrealized foreign currency net gains and losses on the translation of the assets and liabilities of its foreign operations; (ii) realized and unrealized foreign currency gains and losses on certain hedges of net investments in foreign operations, net of income taxes; (iii) unrealized gains and losses on cash flow hedges (consisting of interest rate swap and cap contracts), net of income taxes; and (iv) pension and other postretirement prior service cost and actuarial gains or losses, net of income taxes. See Note 9 “Benefit Plans” and Note 13 “Hedging Activities and Derivative Instruments.”

The before tax income (loss) and related income tax effect are as follows.

			For the Three Month Period Ended March 31,
			2023																		2022
			Before-Tax Amount						Tax Benefit or (Expense)						Net of Tax Amount						Before-Tax Amount						Tax Benefit or (Expense)						Net of Tax Amount
Foreign currency translation adjustments, net			$	46.2					$	(15.4)					$	30.8					$	(21.7)					$	(7.1)					$	(28.8)
Unrecognized losses on cash flow hedges			(7.1)						1.8						(5.3)						—						—						—
Pension and other postretirement benefit prior service cost and gain or loss, net			(0.2)						—						(0.2)						(1.5)						0.4						(1.1)
Other comprehensive income (loss)			$	38.9					$	(13.6)					$	25.3					$	(23.2)					$	(6.7)					$	(29.9)

The tables above include only the other comprehensive income (loss), net of tax, attributable to Ingersoll Rand Inc. Other comprehensive income, net of tax, attributable to noncontrolling interest holders was $0.9 million and $0.6 million for the three month periods ended March 31, 2023 and 2022, respectively, and related entirely to foreign currency translation adjustments.

Changes in accumulated other comprehensive loss by component for the three month periods ended March 31, 2023 and 2022 are presented in the following table net of tax.

			Foreign Currency Translation Adjustments, Net						Cash Flow Hedges						Pension and Other Postretirement Benefit Plans						Total
Balance as of December 31, 2022			$	(282.8)					$	16.0					$	15.1					$	(251.7)
Other comprehensive income (loss) before reclassifications			34.8						(3.8)						0.2						31.2
Amounts reclassified from accumulated other comprehensive loss			(4.0)						(1.5)						(0.4)						(5.9)
Other comprehensive income (loss)			30.8						(5.3)						(0.2)						25.3
Balance as of March 31, 2023			$	(252.0)					$	10.7					$	14.9					$	(226.4)

			Foreign Currency Translation Adjustments, Net						Cash Flow Hedges						Pension and Other Postretirement Benefit Plans						Total
Balance as of December 31, 2021			$	(29.9)					$	—					$	(11.7)					$	(41.6)
Other comprehensive loss before reclassifications			(28.8)						—						(0.5)						(29.3)
Amounts reclassified from accumulated other comprehensive loss			—						—						(0.6)						(0.6)
Other comprehensive loss			(28.8)						—						(1.1)						(29.9)
Balance as of March 31, 2022			$	(58.7)					$	—					$	(12.8)					$	(71.5)

Reclassifications out of accumulated other comprehensive loss for the three month periods ended March 31, 2023 and 2022 are presented in the following table.

Amount Reclassified from Accumulated Other Comprehensive Loss
Details about Accumulated Other Comprehensive Loss Components						For the Three Month Period Ended March 31,												Affected Line(s) in the Statement Where Net Income is Presented
			2023						2022
Cash flow hedges (interest rate swaps and caps)						$	(2.0)					$	—					Interest expense
Provision for income taxes						0.5						—						Provision for income taxes
Cash flow hedges (interest rate swaps and caps), net of tax						$	(1.5)					$	—
Net investment hedges						$	(5.4)					$	—					Interest expense
Provision for income taxes						1.4						—						Provision for income taxes
Net investment hedges, net of tax						$	(4.0)					$	—
Amortization of defined benefit pension and other postretirement benefit items(1)						$	(0.5)					$	(0.8)					Cost of sales and Selling and administrative expenses
Provision for income taxes						0.1						0.2						Provision for income taxes
Amortization of defined benefit pension and other postretirement benefit items, net of tax						$	(0.4)					$	(0.6)
Total reclassifications for the period, net of tax						$	(5.9)					$	(0.6)

(1)These components are included in the computation of net periodic benefit cost. See Note 9 “Benefit Plans” for additional details.

Note 13. Hedging Activities and Derivative Instruments

Hedging Activities

The Company is exposed to certain market risks during the normal course of its business arising from adverse changes in interest rates and foreign currency exchange rates. The Company selectively uses derivative financial instruments (“derivatives”), including cross-currency interest rate swap and foreign currency forward contracts and interest rate swap and cap contracts, to manage the risks from fluctuations in foreign currency exchange rates and interest rates, respectively. The Company does not purchase or hold derivatives for trading or speculative purposes.

The Company’s exposure to interest rate risk results primarily from its variable-rate borrowings. The Company manages its debt centrally, considering tax consequences and its overall financing strategies. The Company manages its exposure to interest rate risk by using interest rate caps and pay-fixed swaps as cash flow hedges of variable rate debt in order to adjust the relative fixed and variable proportions.

A substantial portion of the Company’s operations is conducted by its subsidiaries outside of the United States in currencies other than the USD. Almost all of the Company’s non-U.S. subsidiaries conduct their business primarily in their local currencies, which are also their functional currencies. The USD, the EUR, GBP, Chinese Renminbi and Indian rupee are the principal currencies in

which the Company and its subsidiaries enter into transactions. The Company is exposed to the impacts of changes in foreign currency exchange rates on the translation of its non-U.S. subsidiaries’ assets, liabilities and earnings into USD. The Company manages this exposure by having certain U.S. subsidiaries borrow in currencies other than the USD or utilizing cross-currency interest rate swaps as net investment hedges.

The Company and its subsidiaries are also subject to the risk that arises when they, from time to time, enter into transactions in currencies other than their functional currency. To mitigate this risk, the Company and its subsidiaries typically settle intercompany trading balances at least quarterly. The Company also selectively uses forward currency contracts to manage this risk. These contracts for the sale or purchase of European and other currencies generally mature within one year.

Derivative Instruments

The following table summarizes the notional amounts, fair values and classification of the Company’s outstanding derivatives by risk category and instrument type within the Condensed Consolidated Balance Sheets as of March 31, 2023 and December 31, 2022.

March 31, 2023
Derivative Classification									Notional Amount**(1)**						Fair Value**(1)** Other Current Assets						Fair Value**(1)** Other Assets						Fair Value**(1)** Accrued Liabilities						Fair Value**(1)** Other Liabilities
Derivatives Designated as Hedging Instruments
Interest rate swap contracts			Cash flow						$	528.5					$	7.9					$	1.6					$	—					$	—
Interest rate cap contracts			Cash flow						1,000.0						8.7						5.8						—						—
Cross-currency interest rate swap contracts			Net investment						1,054.2						14.9						—						—						36.7
Derivatives Not Designated as Hedging Instruments
Foreign currency forwards			Fair value						20.9						—						—						—						0.1

December 31, 2022
Derivative Classification									Notional Amount**(1)**						Fair Value**(1)** Other Current Assets						Fair Value**(1)** Other Assets						Fair Value**(1)** Accrued Liabilities						Fair Value**(1)** Other Liabilities
Derivatives Designated as Hedging Instruments
Interest rate swap contracts			Cash Flow						$	528.5					$	8.8					$	5.3					$	—					$	—
Interest rate cap contracts			Cash flow						1,000.0						8.3						9.8						—						—
Cross-currency interest rate swap contracts			Net investment						1,054.2						17.7						—						—						28.7
Derivatives Not Designated as Hedging Instruments
Foreign currency forwards			Fair Value						$	7.3					$	—					$	—					$	—					$	—
Foreign currency forwards			Fair Value						15.8						—						—						—						—

(1)Notional amounts represent the gross contract amounts of the outstanding derivatives excluding the total notional amount of positions that have been effectively closed through offsetting positions. The net gains and net losses associated with positions that have been effectively closed through offsetting positions but not yet settled are included in the asset and liability derivatives fair value columns, respectively.

Payments of interest rate cap premiums are classified as financing cash flows in the Condensed Consolidated Statements of Cash Flows. All other cash flows related to derivatives are classified as operating cash flows in the Condensed Consolidated Statements of Cash Flows.

There were no off-balance sheet derivative instruments as of March 31, 2023 or December 31, 2022.

Interest Rate Swap and Cap Contracts Designated as Cash Flow Hedges

As of March 31, 2023, the Company was the fixed rate payor on two interest rate swap contracts that effectively fix the SOFR-based index used to determine the interest rates charged on a total of $528.5 million of the Company’s SOFR-based variable rate borrowings. These contracts carry a fixed rate of 3.2% and expire in 2025. These swap agreements qualify as hedging instruments and have been designated as cash flow hedges of forecasted SOFR-based interest payments. Based on SOFR-based swap yield

curves as of March 31, 2023, the Company expects to reclassify gains of $7.9 million out of accumulated other comprehensive income (“AOCI”) into earnings during the next 12 months.

As of March 31, 2023, the Company entered into three interest rate cap contracts that effectively limit the SOFR-based index used to determine the interest rates charged on a total of $1,000.0 million of the Company’s SOFR-based variable rate borrowings to 4.0% and expire in 2025. These swap agreements qualify as hedging instruments and have been designated as cash flow hedges of forecasted SOFR-based interest payments. As of March 31, 2023, the Company expects to reclassify net gains of $1.4 million out of AOCI into earnings during the next 12 months.

Losses on derivatives designated as cash flow hedges included in the Condensed Consolidated Statements of Comprehensive Income (Loss) for the three month periods ended March 31, 2023 and 2022 are as presented in the table below.

			For the Three Month Period Ended March 31,
			2023						2022
Loss recognized in OCI on derivatives			$	(5.1)					$	—
Gain reclassified from AOCI into income (effective portion)(1)			2.0						—

(1)Losses on derivatives reclassified from AOCI into income were included within “Interest expense” in the Condensed Consolidated Statements of Operations.

Cross-Currency Interest Rate Swap Contracts Designated as Net Investment Hedges

As of March 31, 2023, the Company was the fixed rate payor on two cross-currency interest rate swap contracts that replace a fixed rate of 3.2% on a total of $528.5 million with a fixed rate of 1.6% on a total of €500.0 million. These contracts expire in 2025. These contracts have been designated as net investment hedges of our Euro denominated subsidiaries and require an exchange of the notional amounts at maturity.

As of March 31, 2023, the Company entered into three cross-currency interest rate swap contracts where we receive SOFR on a total of $525.7 million and pay EURIBOR on a total of €500.0 million. These contracts expire in 2025. These contracts have been designated as net investment hedges of our Euro denominated subsidiaries and require an exchange of the notional amounts at maturity.

Losses on derivatives designated as net investment hedges included in the Condensed Consolidated Statements of Comprehensive Income (Loss) for the three month periods ended March 31, 2023 and 2022 are as presented in the table below.

			For the Three Month Period Ended March 31,
			2023						2022
Loss recognized in OCI on derivatives			$	(5.5)					$	—
Gain reclassified from AOCI into income (effective portion)(1)			5.4						—

(1)Gains on derivatives reclassified from AOCI into income were included within “Interest expense” in the Condensed Consolidated Statements of Operations.

Foreign Currency Forwards Not Designated as Hedging Instruments

The Company had three foreign currency forward contracts outstanding as of March 31, 2023 with notional amounts ranging from $3.3 million to $10.3 million. These contracts are used to hedge the change in fair value of recognized foreign currency denominated assets or liabilities caused by changes in currency exchange rates. The changes in the fair value of these contracts generally offset the changes in the fair value of a corresponding amount of the hedged items, both of which are included within “Other operating expense, net” in the Condensed Consolidated Statements of Operations. The Company’s foreign currency forward contracts are subject to master netting arrangements or agreements between the Company and each counterparty for the net settlement of all contracts through a single payment in a single currency in the event of default on or termination of any one contract with that certain counterparty. It is the Company’s practice to recognize the gross amounts in the Condensed Consolidated Balance Sheets. The amount available to be netted is not material.

The Company’s gains (losses) on derivative instruments not designated as accounting hedges and total net foreign currency losses for the three month periods ended March 31, 2023 and 2022 were as follows.

			For the Three Month Period Ended March 31,
			2023						2022
Foreign currency forward contracts gains (losses)			$	0.2					$	(1.0)
Total foreign currency transaction gains (losses), net			(1.0)						3.8

Foreign Currency Denominated Debt Designated as a Net Investment Hedge

In February 2020, the Company designated its Euro Term Loan, which had a principal balance at that time of €601.2 million, as a hedge of the Company's net investment in subsidiaries with a functional currency of euro. This loan was repaid in June 2022 and the hedge has been discontinued. The Company’s gains, net of income tax, associated with changes in the value of debt for the three month period ended March 31, 2022 was $13.3 million.

Note 14. Fair Value Measurements

A financial instrument is defined as cash or cash equivalents, evidence of an ownership interest in an entity, or a contract that creates a contractual obligation or right to deliver or receive cash or another financial instrument from another party. The Company’s financial instruments consist primarily of cash and cash equivalents, trade accounts receivables, trade accounts payables, deferred compensation assets and obligations, acquisition related contingent consideration obligations, derivatives and debt instruments. The carrying values of cash and cash equivalents, trade accounts receivables, trade accounts payables, and variable rate debt instruments are a reasonable estimate of their respective fair values.

Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or more advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Valuation techniques used to measure fair value must maximize the use of observable inputs and minimize the use of unobservable inputs. The fair value hierarchy is based on three levels of inputs, of which the first two are considered observable and the last unobservable, that may be used to measure fair value as follows.

Level 1 Quoted prices (unadjusted) in active markets for identical assets or liabilities as of the reporting date.

Level 2 Inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities as of the reporting date.

Level 3 Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.

The following tables summarize the Company’s financial assets and liabilities measured at fair value on a recurring basis as of March 31, 2023 and December 31, 2022.

			March 31, 2023
			Level 1						Level 2						Level 3						Total
Financial Assets
Trading securities held in deferred compensation plan(1)			$	13.5					$	—					$	—					$	13.5
Interest rate swaps(2)			—						9.5						—						9.5
Interest rate caps(3)			—						14.5						—						14.5
Cross-currency interest rate swaps(4)			—						14.9						—						14.9
Total			$	13.5					$	38.9					$	—					$	52.4
Financial Liabilities
Deferred compensation plans(1)			$	19.7					$	—					$	—					$	19.7
Cross-currency interest rate swaps(4)			—						36.7						—						36.7
Contingent consideration(6)			—						—						48.4						48.4
Foreign currency forwards(5)			—						0.1						—						0.1
Total			$	19.7					$	36.8					$	48.4					$	104.9

			December 31, 2022
			Level 1						Level 2						Level 3						Total
Financial Assets
Trading securities held in deferred compensation plan(1)			$	12.3					$	—					$	—					$	12.3
Interest rate swaps(2)			—						14.1						—						14.1
Interest rate caps(3)			—						18.1						—						18.1
Cross-currency interest rate swaps(4)			—						17.7						—						17.7
Foreign currency forwards(5)			—						—						—						—
Total			$	12.3					$	49.9					$	—					$	62.2
Financial Liabilities
Deferred compensation plan(1)			$	19.6					$	—					$	—					$	19.6
Cross-currency interest rate swaps(4)			—						28.7						—						28.7
Contingent consideration(6)			—						—						43.9						43.9
Foreign currency forwards(5)			—						—						—						—
Total			$	19.6					$	28.7					$	43.9					$	92.2

(1)Based on the quoted price of publicly traded mutual funds and other equity securities which are classified as trading securities and accounted for using the mark-to-market method.

(2)Measured as the present value of all expected future cash flows based on the SOFR-based swap yield curves as of March 31, 2023. The present value calculation uses discount rates that have been adjusted to reflect the credit quality of the Company and its counterparties.

(3)Measured as the present value of all expected future cash flows that would occur if variable interest rates rise above the strike rate of the caps. The variable interest rates used in the calculation of projected receipts on the cap are based on an expectation of future interest rates derived from observable market volatilities and interest rate curves.

(4)Measured as the present value of all expected future cash flows on each leg of the contracts. The model utilizes inputs of observable market data including interest yield curves and foreign currency exchange rates. The present value calculation uses cross-currency basis-adjusted discount factors that have been adjusted to reflect the credit quality of the Company and its counterparties.

(5)Based on calculations that use readily observable market parameters at their basis, such as spot and forward rates.

(6)Measured as the present value of expected consideration payable for completed acquisitions, generally derived using probability-weighted analysis of achieving projected revenue or EBITDA targets.

Contingent Consideration

Certain of the Company's acquisitions may result in payments of consideration in future periods that are contingent upon the achievement of certain targets, generally measures of revenue and EBITDA. As part of the initial accounting for the acquisition, a liability is recorded for the estimated fair value of the contingent consideration on the acquisition date. The fair value of the contingent consideration is re-measured at each reporting period, and the change in fair value is recognized within “Other operating expense, net” in the Consolidated Statements of Operations. This fair value measurement of contingent consideration is categorized within Level 3 of the fair value hierarchy, as the measurement amount is based primarily on significant inputs that are not observable in the market.

The following table provides a reconciliation of the activity for contingent consideration for the three month period ended March 31, 2023.

Balance at beginning of the period			$	43.9
Changes in fair value			4.3
Foreign currency translation			0.2
Balance at end of the period			$	48.4

As of March 31, 2023, the contingent consideration included in “Accrued liabilities” and “Other liabilities” on the Consolidated Balance Sheets were $19.6 million and $28.8 million, respectively.

Note 15. Revenue from Contracts with Customers

Overview

The Company recognizes revenue when the Company has satisfied its obligation and control is transferred to the customer. The amount of revenue recognized includes adjustments for any variable consideration, such as rebates, sales discounts, liquidated damages, etc., which are included in the transaction price, and allocated to each performance obligation. The variable consideration is estimated throughout the course of the contract using the Company’s best estimates.

The majority of the Company’s revenues are derived from short duration contracts and revenue is recognized at a single point in time when control is transferred to the customer, generally at shipment or when delivery has occurred or services have been rendered.

The Company has certain long duration engineered to order (“ETO”) contracts that require highly engineered solutions designed to customer specific applications. For contracts where the contractual deliverables have no alternative use and the contract termination clauses provide for the recovery of cost plus a reasonable margin, revenue is recognized over time based on the Company’s progress in satisfying the contractual performance obligations, generally measured as the ratio of actual costs incurred to date to the estimated total costs to complete the contract. For contracts with termination provisions that do not provide for recovery of cost and a reasonable margin, revenue is recognized at a point in time, generally at shipment or delivery to the customer. Identification of performance obligations, determination of alternative use, assessment of contractual language regarding termination provisions, and estimation of total project costs are all significant judgments required in the application of ASC 606.

Contractual specifications and requirements may be modified. The Company considers contract modifications to exist when the modification either creates new or changes the existing enforceable rights and obligations. In the event a contract modification is for goods or services that are not distinct in the contract, and therefore, form part of a single performance obligation that is partially satisfied as of the modification date, the effect of the contract modification on the transaction price and the Company’s measure of progress for the performance obligation to which it relates, is recognized on a cumulative catch-up basis.

Taxes assessed by a government authority that are both imposed on and concurrent with a specific revenue-producing transaction, that are collected by the Company from a customer, are excluded from revenue. Sales commissions are generally due at either collection of payment from customers or recognition of revenue. Applying the practical expedient from ASC 340-40-25-4, the Company recognizes the incremental costs of obtaining contracts as an expense when incurred if the amortization period of the assets that the Company otherwise would have recognized is one year or less. These costs are included in “Selling and administrative expenses” in the Condensed Consolidated Statements of Operations.

Disaggregation of Revenue

The following tables provide disaggregated revenue by reportable segment for the three month periods ended March 31, 2023 and 2022.

			Industrial Technologies and Services												Precision and Science Technologies																								Total
			Three Month Period Ended March 31,
			2023						2022						2023						2022																		2023						2022
Primary Geographic Markets
United States			$	551.2					$	414.8					$	144.2					$	134.3																	$	695.4					$	549.1
Other Americas			90.9						73.3						7.3						8.5																		98.2						81.8
Total Americas			642.1						488.1						151.5						142.8																		793.6						630.9
EMEIA			426.0						331.8						113.4						109.7																		539.4						441.5
Asia Pacific			249.1						219.7						47.2						44.9																		296.3						264.6
Total			$	1,317.2					$	1,039.6					$	312.1					$	297.4																	$	1,629.3					$	1,337.0
Product Categories
Original equipment			$	790.1					$	614.2					$	245.3					$	239.0																	$	1,035.4					$	853.2
Aftermarket			527.1						425.4						66.8						58.4																		593.9						483.8
Total			$	1,317.2					$	1,039.6					$	312.1					$	297.4																	$	1,629.3					$	1,337.0
Pattern of Revenue Recognition
Revenue recognized at point in time(1)			$	1,220.5					$	956.6					$	311.2					$	295.5																	$	1,531.7					$	1,252.1
Revenue recognized over time(2)			96.7						83.0						0.9						1.9																		97.6						84.9
Total			$	1,317.2					$	1,039.6					$	312.1					$	297.4																	$	1,629.3					$	1,337.0

(1)Revenues from short and long duration product and service contracts recognized at a point in time when control is transferred to the customer generally when product delivery has occurred and services have been rendered.

(2)Revenues primarily from long duration ETO product contracts and certain contracts for delivery of a significant volume of substantially similar products recognized over time as contractual performance obligations are completed.

Performance Obligations

As of March 31, 2023, for contracts with an original duration greater than one year, the Company expects to recognize revenue in the future related to unsatisfied (or partially satisfied) performance obligations of $636.0 million in the next twelve months and $508.3 million in periods thereafter. The performance obligations that are unsatisfied (or partially satisfied) are primarily related to orders for goods or services that were placed prior to the end of the reporting period and have not been delivered to the customer, on-going work on ETO contracts where revenue is recognized over time and service contracts with an original duration greater than one year.

Contract Balances

The following table provides the contract balances as of March 31, 2023 and December 31, 2022 presented in the Condensed Consolidated Balance Sheets.

			March 31, 2023						December 31, 2022
Accounts receivable, net			$	1,243.6					$	1,122.0
Contract assets			44.4						70.6
Contract liabilities - current			350.8						305.6
Contract liabilities - noncurrent			1.2						1.1

Note 16. Income Taxes

The following table summarizes the Company’s provision for income taxes and effective income tax provision rate for the three month periods ended March 31, 2023 and 2022.

			For the Three Month Period Ended March 31,
			2023						2022
Income before income taxes			$	211.0					$	142.6
Provision for income taxes			$	48.1					$	32.4
Effective income tax provision rate			22.8		%				22.7		%

The increase in the provision for income taxes and increase in the effective income tax provision rate for the three month period ended March 31, 2023 when compared to the same three month period of 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.

Note 17. Other Operating Expense, Net

The components of “Other operating expense, net” for the three month periods ended March 31, 2023 and 2022 were as follows.

			For the Three Month Period Ended March 31,
			2023						2022
Foreign currency transaction losses (gains), net			$	1.0					$	(3.8)
Restructuring charges, net(1)			2.9						12.5
Acquisition and other transaction related expenses(2)			15.2						7.5
Other, net			1.3						1.2
Total other operating expense, net			$	20.4					$	17.4

(1)See Note 4 “Restructuring.”

(2)Represents costs associated with successful and abandoned acquisitions, including third-party expenses and post-closure integration costs.

Note 18. Contingencies

The Company is a party to various legal proceedings, lawsuits and administrative actions, which are of an ordinary or routine nature for a company of its size and sector. The Company believes that such proceedings, lawsuits and administrative actions will not materially adversely affect its operations, financial condition, liquidity or competitive position. For further description of the Company’s contingencies, reference is made to Note 21, “Contingencies” in the notes to consolidated financial statements in the Company’s 2022 Form 10-K.

Asbestos and Silica Related Litigation

The Company believes that the pending and future asbestos and silica-related lawsuits are not likely to, in the aggregate, have a material adverse effect on its consolidated financial position, results of operations or liquidity. “Accrued liabilities” and “Other liabilities” of the Condensed Consolidated Balance Sheets include a total litigation reserve of $135.7 million and $137.9 million as of March 31, 2023 and December 31, 2022, respectively, with regards to potential liability arising from the Company’s asbestos-related litigation. Asbestos related defense costs are excluded from the asbestos claims liability and are recorded separately as services are incurred. In the event of unexpected future developments, it is possible that the ultimate resolution of these matters may be material to the Company’s consolidated financial position, results of operation or liquidity.

The Company has entered into a series of agreements with certain of its or its predecessors’ legacy insurers and certain potential indemnitors to secure insurance coverage and/or reimbursement for the costs associated with the asbestos and silica-related lawsuits filed against the Company. The Company has an insurance recovery receivable for probable asbestos related recoveries of approximately $154.1 million and $154.2 million as of March 31, 2023 and December 31, 2022, respectively, which was included in “Other assets” in the Condensed Consolidated Balance Sheets. The amounts recorded by the Company for asbestos-related liabilities and insurance recoveries are based on currently available information and assumptions that the Company

believes are reasonable based on an evaluation of relevant factors. The actual liabilities or insurance recoveries could be higher or lower than those recorded if actual results vary significantly from the assumptions.

Environmental Matters

The Company has been identified as a potentially responsible party (“PRP”) with respect to several sites designated for cleanup under U.S. federal “Superfund” or similar state laws that impose liability for cleanup of certain waste sites and for related natural resource damages. The Company has undiscounted accrued liabilities of $15.3 million and $13.5 million as of March 31, 2023 and December 31, 2022, respectively, on its Condensed Consolidated Balance Sheets to the extent costs are known or can be reasonably estimated for its remaining financial obligations in relation to environmental matters and does not anticipate that any of these matters will result in material additional costs beyond amounts accrued. Based upon consideration of currently available information, the Company does not anticipate any material adverse effect on its results of operations, financial condition, liquidity or competitive position as a result of compliance with federal, state, local or foreign environmental laws or regulations, or cleanup costs relating to these matters.

Note 19. Segment Results

A description of the Company’s two reportable segments is presented below.

In the Industrial Technologies and Services segment, the Company designs, manufactures, markets and services a broad range of compression and vacuum equipment as well as fluid transfer equipment, loading systems, power tools and lifting equipment. The Company’s compression and vacuum products are used worldwide in industrial manufacturing, transportation, chemical processing, food and beverage production, energy, environmental and other applications. In addition to equipment sales, the Company offers a broad portfolio of service options tailored to customer needs and complete range of aftermarket parts, air treatment equipment, controls and other accessories. The Company’s engineered loading systems and fluid transfer equipment ensure the safe handling and transfer of crude oil, liquefied natural gas, compressed natural gas, chemicals, and bulk materials. The Company’s power tools and lifting equipment are used by customers in industrial manufacturing, vehicle maintenance, energy and other markets for precision fastening, bolt removal, grinding, sanding, drilling, demolition and the safe and efficient lifting, positioning and movement of loads. The Company sells its products primarily through independent distributors worldwide and also sells directly to the customer.

In the Precision and Science Technologies segment, the Company designs, manufactures and markets a broad range of specialized positive displacement pumps, fluid management equipment and aftermarket parts for medical, laboratory, industrial manufacturing, water and wastewater, chemical processing, energy, food and beverage, agriculture and other markets. The Company’s products are used for a diverse set of applications including precision dosing of chemicals and supplements, blood dialysis, oxygen therapy, food processing, fluid transfer and dispensing, spray finishing and coating, mixing, high-pressure air and gas management and others. The Company sells primarily through a broad global network of specialized and national distributors and original equipment manufacturers (“OEM”) who integrate the Company’s products into their devices and systems.

The Chief Operating Decision Maker (“CODM”) evaluates the performance of the Company’s reportable segments based on, among other measures, Segment Adjusted EBITDA. Management closely monitors the Segment Adjusted EBITDA of each reportable segment to evaluate past performance and actions required to improve profitability. Inter-segment sales and transfers are not significant. Administrative expenses related to the Company’s corporate offices and shared service centers in North America and Europe, which includes transaction processing, accounting and other business support functions, are allocated to the business segments. Certain administrative expenses, including senior management compensation, treasury, internal audit, tax compliance, certain information technology, and other corporate functions, are not allocated to the business segments.

The following table provides summarized information about the Company’s operations by reportable segment and reconciles Segment Adjusted EBITDA to Income from Continuing Operations Before Income Taxes for the three month periods ended March 31, 2023 and 2022.

			For the Three Month Period Ended March 31,
			2023						2022
Revenue
Industrial Technologies and Services			$	1,317.2					$	1,039.6
Precision and Science Technologies			312.1						297.4
Total Revenue			$	1,629.3					$	1,337.0
Segment Adjusted EBITDA
Industrial Technologies and Services			$	345.6					$	247.4
Precision and Science Technologies			94.5						85.1
Total Segment Adjusted EBITDA			$	440.1					$	332.5
Less items to reconcile Segment Adjusted EBITDA to Income from Continuing Operations Before Income Taxes:
Corporate expenses not allocated to segments			$	40.0					$	28.9
Interest expense			38.9						19.0
Depreciation and amortization expense (a)			113.1						107.5
Restructuring and related business transformation costs (b)			4.3						14.2
Acquisition and other transaction related expenses and non-cash charges (c)			18.0						9.5
Stock-based compensation			12.1						19.8
Foreign currency transaction losses (gains), net			1.0						(3.8)
Adjustments to LIFO inventories			7.8						—
Other adjustments (d)			(6.1)						(5.2)
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

a)Depreciation and amortization 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)Restructuring and related business transformation costs consist 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

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

d)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.

Note 20. Earnings Per Share

The number of weighted-average shares outstanding used in the computations of basic and diluted earnings per share are as follows.

			For the Three Month Period Ended March 31,
			2023						2022
Average shares outstanding
Basic			405.0						407.6
Diluted			409.2						413.1

For the three month periods ended March 31, 2023 and 2022, 2.0 million and 1.6 million, respectively, of anti-dilutive shares were not included in the computation of diluted earnings per share.

Note 21. Subsequent Event

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.