Ingersoll Rand Reports Strong First-Quarter 2019 Results

Highlights (First quarter 2019 versus first quarter 2018, unless
otherwise noted):

• Continuing EPS of $0.82, up 61 percent; adjusted continuing EPS* of
  $0.89, up 27 percent
• Reported revenues up 6 percent; organic revenues* up 8 percent led
  by the Climate segment
• Operating margin expansion of 170 bps; adjusted operating margin*
  higher by 90 bps
• Book to bill* of 105 percent driving record backlog
• Company raises full-year 2019 EPS guidance to top end of prior range

^{*This news release contains non-GAAP financial measures.
Definitions of the non-GAAP financial measures can be found in the
footnotes of this news release. See attached tables for additional
details and reconciliations.}

SWORDS, Ireland–(BUSINESS WIRE)–Ingersoll-Rand plc (NYSE: IR), a world leader in creating comfortable,
sustainable and efficient environments, today reported diluted earnings
per share (EPS) from continuing operations of $0.82 for the first
quarter of 2019. Adjusted continuing EPS of $0.89 excludes restructuring
costs of $17 million primarily related to ongoing footprint optimization
and acquisition related transaction costs of $2 million.

First-Quarter 2019 Results

Financial Comparisons – First-Quarter Continuing Operations

“We are off to a strong start again, in 2019. In the first quarter, we
grew adjusted continuing earnings per share by 27 percent through our
team’s continued, focused execution of our business strategy,” said
Michael W. Lamach, chairman and chief executive officer of Ingersoll
Rand. “We delivered differentiated financial results as our markets and
customers continue to move towards solutions that address energy
efficiency and lower greenhouse gas emissions. Entering the second
quarter, our backlog is at record levels and we are seeing solid demand
in most of our major end-markets. Through consistent use of our business
operating system, we effectively managed material and tariff-related
inflation and expanded margins. Though it’s early in the year, we have
strong momentum and are confident in raising adjusted continuing
earnings per share guidance to the high end of our previous range, or
approximately $6.35 per share.”

Highlights from the First Quarter of 2019 (all comparisons against
the first quarter of 2018 unless otherwise noted)

• Strong revenue growth with organic revenue growth across all
  businesses, in virtually all products and geographies.
• Enterprise reported revenue growth offset by approximately 2
  percentage points of negative foreign exchange impact.
• Enterprise reported bookings down 4 percent; organic bookings* down 2
  percent. Enterprise and Climate bookings growth rates were
  significantly impacted by difficult comparisons related to
  extraordinary North American Trailer and APU bookings growth in Q1
  2018. Strong underlying organic bookings in most major businesses led
  by Commercial North America, Europe and Residential HVAC and
  Compression Technologies North America, all up mid-single to
  high-single digits.
• Enterprise bookings growth was also impacted by difficult comparisons
  in China HVAC of greater than 25 percent in Q1 2018.
• Underlying enterprise order strength, including Transport, drove 105
  percent book to bill in Q1 2019 resulting in record enterprise backlog.
• Operating margin improved 170 basis points; adjusted operating margin
  up 90 basis points driven by strong price realization, volume growth
  and productivity partially offset by material inflation, including
  tariffs and other inflation.

First-Quarter Business Review (all comparisons against the first
quarter of 2018 unless otherwise noted)

Climate Segment: delivers energy-efficient products and
innovative energy services. The segment includes Trane^® and
American Standard^® Heating & Air Conditioning which provide
heating, ventilation and air conditioning (HVAC) systems, and commercial
and residential building services, parts, support and controls; energy
services and building automation through Trane Building Advantage™ and
Nexia™; and Thermo King^® transport temperature control
solutions.

• Revenue up 7 percent with organic revenue up 10 percent. Climate
  revenue growth strong with broad-based organic revenue growth in all
  businesses and regions.
• Climate reported revenue growth offset by approximately 3 percentage
  points of negative foreign exchange impact.
• Climate bookings down 5 percent and organic bookings down 3 percent.
  Climate bookings growth rates heavily impacted by the aforementioned
  exceptional North American trailer and APU bookings in Q1 2018. As
  mentioned, strong organic bookings in HVAC led by North America,
  Europe and Residential, all grew mid-single to high-single digits in
  the quarter.
• Operating margins improved 120 basis points; adjusted operating margin
  improved 130 basis points driven by strong price realization, volume
  growth and productivity; partially offset by inflationary headwinds
  and continued business investments.

Industrial Segment: delivers products and services that enhance
energy efficiency, productivity and operations. The segment includes
compressed air and gas systems and services, power tools, material
handling systems, ARO^® fluid management equipment, as well as
Club Car^® golf, utility and consumer low-speed vehicles.

• Bookings down 2 percent and revenue flat. Organic bookings up 1
  percent with organic revenue up 3 percent.
• Industrial reported revenue growth offset by approximately 3
  percentage points negative foreign exchange impact.
• Operating margin improved 320 basis points; adjusted operating margin
  flat with strong pricing and productivity actions offset by
  inflationary headwinds and continued business investments.
• Industrial margins negatively impacted by a temporary supplier
  disruption in Small Electric Vehicles of approximately $4 million.
  Excluding the impact of the supplier disruption, Industrial segment
  adjusted operating margins improved 50 basis points. We expect to
  resolve the supplier disruption by the end of Q2 with no impact to
  full-year 2019 margin expectations.

Balance Sheet and Cash Flow

• First-quarter 2019 cash flow from continuing operating activities was
  ($37) million, consistent with the Company’s expectations and normal
  business seasonality.
• The Company maintained working capital levels to support continued
  expected growth during cooling season. Full year 2019 free cash flow
  target remains unchanged.
• During March 2019, the Company completed a $1.5 billion senior notes
  offering. The Company intends to use the net proceeds primarily to
  finance the pending acquisition of Precision Flow Systems.

Capital Deployment

• Continued execution of a balanced capital allocation strategy.
• Year to date, the Company has returned approximately $378 million to
  shareholders through share repurchases ($250 million) and dividends
  ($128 million).
• Precision Flow Systems offer accepted by seller, regulatory approval
  expected mid-year 2019.

Tax Rate

• Q1 2019 adjusted effective tax rate* of 17 percent, lower than prior
  year by approximately 340 basis points primarily driven by a discrete
  tax benefit in connection with equity compensation. Full year adjusted
  effective tax rate guidance of approximately 21 to 22 percent remains
  unchanged.

Full-Year 2019 EPS Guidance

• The Company exited the first quarter with increased confidence in its
  ability to execute against its growth and margin targets.
• As a result, while it is still early in the year, the Company raised
  its full-year 2019 continuing EPS guidance from $5.90 to $6.10 to
  approximately $6.10. Full year adjusted continuing EPS guidance is
  raised from $6.15 to $6.35 to approximately $6.35.

This news release includes “forward-looking statements,” which are
statements that are not historical facts, including statements that
relate to the mix of and demand for our products; performance of the
markets in which we operate; our share repurchase program including the
amount of shares to be repurchased and timing of such repurchases; our
capital allocation strategy including projected acquisitions;
restructuring activity; supplier disruption and our expectations for
resolving the disruption; our projected 2019 full-year financial
performance and targets including assumptions regarding our effective
tax rate, tax reform measurement period adjustments and other factors
described in our guidance. These forward-looking statements are based on
our current expectations and are subject to risks and uncertainties,
which may cause actual results to differ materially from our current
expectations. Such factors include, but are not limited to, global
economic conditions, the outcome of any litigation, demand for our
products and services, and tax law changes. Additional factors that
could cause such differences can be found in our Form 10-K for the year
ended December 31, 2018, as well as our subsequent reports on Form 10-Q
and other SEC filings. We assume no obligation to update these
forward-looking statements.

This news release also includes non-GAAP financial information which
should be considered supplemental to, not a substitute for, or superior
to, the financial measure calculated in accordance with GAAP. The
definitions of our non-GAAP financial information and reconciliation to
GAAP is attached to this news release.

All amounts reported within the earnings release above related to net
earnings (loss), earnings (loss) from continuing operations, earnings
(loss) from discontinued operations, and per share amounts are
attributed to Ingersoll Rand’s ordinary shareholders.

Ingersoll Rand (NYSE:IR) advances the quality of life by creating
comfortable, sustainable and efficient environments. Our people and our
family of brands – including Club
Car^®, Ingersoll
Rand^®, Thermo
King^® and Trane^®
– work together to enhance the quality and comfort of air in homes and
buildings; transport and protect food and perishables; and increase
industrial productivity and efficiency. We are a global business
committed to a world of sustainable progress and enduring results. For
more information, visit ingersollrand.com.

4/30/19

(See Accompanying Tables)

• Table 1: Condensed Consolidated Income Statement
• Table 2: Business Review
• Tables 3 – 6: Reconciliation of GAAP to Non-GAAP
• Table 7: Condensed Consolidated Balance Sheets
• Table 8: Condensed Consolidated Statement of Cash Flows
• Table 9: Balance Sheet Metrics and Free Cash Flow

*Q1 Non-GAAP measures definitions

Organic revenue is defined as GAAP net revenues adjusted for the
impact of currency and acquisitions. Organic bookings is
defined as reported orders in the current period adjusted for the impact
of currency and acquisitions.

• Currency impacts on net revenues and bookings are measured by applying
  the prior year’s foreign currency exchange rates to the current
  period’s net revenues and bookings reported in local currency. This
  measure allows for a direct comparison of operating results excluding
  the year-over-year impact of foreign currency translation.

Adjusted operating income is defined as GAAP operating income
plus restructuring costs and acquisition related transaction costs in
2019. Adjusted operating income in 2018 is defined as GAAP operating
income plus restructuring costs. Please refer to the reconciliation of
GAAP to non-GAAP measures on tables 3 and 4 of the news release.

Adjusted operating margin is defined as the ratio of adjusted
operating income divided by net revenues.

Adjusted continuing EPS in 2019 is defined as GAAP continuing EPS
plus restructuring costs and acquisition related transaction costs, net
of tax impacts. Adjusted continuing EPS in 2018 is defined as GAAP
continuing EPS plus restructuring costs and debt redemption premium and
related charges, net of tax impacts. Please refer to the reconciliation
of GAAP to non-GAAP measures on tables 3 and 4 of the news release.

Adjusted EBITDA is defined as adjusted operating income plus
depreciation and amortization expense plus or minus other income /
(expense), net.

Book to bill is defined as reported orders in the current period
divided by GAAP net revenues.

Free cash flow in 2019 and 2018 is defined as net cash provided
by (used in) continuing operating activities, less capital expenditures,
plus cash payments for restructuring. In 2018, the Company updated its
definition of free cash flow to exclude the impacts of discontinued
operations. Please refer to the free cash flow reconciliation on table 9
of the news release.

Working capital measures a firm’s operating liquidity position
and its overall effectiveness in managing the enterprises’ current
accounts.

• Working capital is calculated by adding net accounts and notes
  receivables and inventories and subtracting total current liabilities
  that exclude short term debt, dividend payables and income tax
  payables.
• Working capital as a percent of revenue is calculated by
  dividing the working capital balance (e.g. as of March 31) by the
  annualized revenue for the period (e.g. reported revenues for the
  three months ended March 31 multiplied by 4 to annualize for a full
  year).

Adjusted effective tax rate for 2019 is defined as the ratio of
income tax expense, plus or minus the tax effect of adjustments for
restructuring costs and acquisition related transaction costs, divided
by earnings from continuing operations before income taxes plus
restructuring costs and acquisition related transaction costs. Adjusted
effective tax rate for 2018 is defined as the ratio of income tax
expense, plus or minus the tax effect of adjustments for restructuring
costs and debt redemption premium and related charges, divided by
earnings from continuing operations before income taxes plus
restructuring costs and debt redemption premium and related charges.
This measure allows for a direct comparison of the effective tax rate
between periods.

The Company reports its financial results in accordance with generally
accepted accounting principles in the United States (GAAP). The
following schedules provide non-GAAP financial information and a
quantitative reconciliation of the difference between the non-GAAP
financial measures and the financial measures calculated and reported in
accordance with GAAP.

The non-GAAP financial measures should be considered supplemental to,
not a substitute for or superior to, financial measures calculated in
accordance with GAAP. They have limitations in that they do not reflect
all of the costs associated with the operations of our businesses as
determined in accordance with GAAP. In addition, these measures may not
be comparable to non-GAAP financial measures reported by other companies.

We believe the non-GAAP financial information provides important
supplemental information to both management and investors regarding
financial and business trends used in assessing our financial condition
and results of operations.

Non-GAAP financial measures assist investors with analyzing our business
results as well as with predicting future performance. In addition,
these non-GAAP financial measures are also reviewed by management in
order to evaluate the financial performance of each segment.
Presentation of these non-GAAP financial measures helps investors and
management to assess the operating performance of the Company.

As a result, one should not consider these measures in isolation or as a
substitute for our results reported under GAAP. We compensate for these
limitations by analyzing results on a GAAP basis as well as a non-GAAP
basis, prominently disclosing GAAP results and providing reconciliations
from GAAP results to non-GAAP results.

* Segment operating income is the measure of profit and loss that the
Company uses to evaluate the financial performance of the business and
as the basis for performance reviews, compensation and resource
allocation. For these reasons, the Company believes that Segment
operating income represents the most relevant measure of segment profit
and loss.

Contacts

Media:
Perri Richman
732-319-1024
[email protected]

Investors:
Zac Nagle
704-990-3913
[email protected]

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