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Ingersoll Rand advances the quality of life by creating comfortable, sustainable and efficient environments. 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 $13 billion global business committed to a world of sustainable progress and enduring results.
47

Ingersoll Investor Presentation

Apr 08, 2017

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Page 1: Ingersoll Investor Presentation

Ingersoll Rand advances the quality of life by creating comfortable, sustainable and efficient environments.

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 $13 billion global business

committed to a world of sustainable progress and

enduring results.

Page 2: Ingersoll Investor Presentation

2

Safe Harbor

This presentation 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 projected 2017 full-

year financial performance and targets including assumptions regarding our effective tax rate.

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, 2015, Form 10-Q for the quarters ended March 31, 2016, June 30, 2016,

and September 30, 2016, and other SEC filings. We assume no obligation to update these

forward-looking statements.

This presentation 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 the earnings news release that can be found at www.ingersollrand.com

and are defined in footnotes at the end of this presentation. All data for beyond the fourth

quarter of 2016 are estimates.

2

Page 3: Ingersoll Investor Presentation

Key Facts

• Ingersoll Rand has been listed continuously on the New York Stock Exchange since October 11, 1906

• Ingersoll Rand is the 16th oldest company and the 12th oldest continuously listed company on the NYSE

• $20B Market cap

Trades on NYSE

• Ingersoll Rand is 145 years old and was first incorporated in 1905

• $13.5 Billion Revenue

• Two business segments

• Climate - Commercial and Residential HVACand Transport Refrigeration

• Industrial – Air compression, Industrial products, low speed vehicles

Company Background

• Ingersoll Rand is incorporated in Swords, Ireland

• North American Headquarters in Davidson, NC

• 40,000 employees

• 51 manufacturing locations

Company Background

Key Facts

3

Page 4: Ingersoll Investor Presentation

4

• A ~$10B group of six growth-oriented SBUs led by high-performing leaders and teams

• Trane and Thermo King are world leaders in HVAC and refrigerated transportation

• An outstanding network of global operations, channels and employees

• Stronger together with BOS linkage and commercial synergies

EMEA is Europe, Middle East, and Africa. Asia Pacific includes India. Services

includes aftermarket parts, accessories, and all types of service.

Commercial

HVAC

Residential

HVAC

HVAC

Parts & Supply

Transport

Solutions

68%

15%

11%

6%

North America

EMEA

Asia Pacific

Latin America

60%

40%

Equipment

Services

Climate Segment An Unmatched Strategic

Position

Page 5: Ingersoll Investor Presentation

5

• A $3.0B group of five growth-oriented Strategic Business Units

• Ingersoll Rand, ARO and Club Car are #1 or #2 brands in their core markets

• World-class engineered and mission-critical products, systems and services

• Balanced across industries, geographic regions, equipment and aftermarket

• SBUs are stronger together with BOS linkage and channel synergies

EMEA is Europe, Middle East, India and Africa. Services includes aftermarket parts,

accessories and service.

AIR Power ToolsFluid

Management

Material

HandlingClub Car

55%

19%

21%

5%

North America

EMEIA

Asia Pacific

Latin America

65%

35%

Equipment

Services

Our Industrial Businesses are in Leading

Positions

5

Page 6: Ingersoll Investor Presentation

2016 REVENUE: $13.5B 33% Aftermarket

By End Markets

66%North America

15%Eur/ME

14%Asia

5%Latin

America

By Geography

5%Golf/Utility

16%Transport

Refrigeration

16%Non-Res

Building

(Overseas)

31%Non-Res

Building

(N. America)

18%Industrial

Process

14%Residential,

(N. America)

67% New equipment

Represents Diverse End Markets and Geography

Climate77%

Industrial23%

By Segment

2016 Revenue Profile

2013 2014 2015

9.6

%

11.0

%

Adjusted Operating Margins

2016

11.9

%11.4

%

6

Page 7: Ingersoll Investor Presentation

7

• Leading global brands and market positions

• Strong long-term growth drivers

- Macro drivers are energy efficiency and

sustainability

- Large installed base drives replacement

business and parts and service growth

- Global footprint and exposure to attractive

growing markets

- Organic growth enhanced by innovation

- Market recoveries

• Product/service offering underpinned by shared

technologies, materials, manufacturing, processes

and supply chain

• Continued margin and cash flow improvement

opportunity from operational/functional excellence

A world leader in creating comfortable, sustainable and

efficient environments

Ingersoll Rand: Foundational Strengths

7

Page 8: Ingersoll Investor Presentation

8

Urbanization

Energy Consumption

Food & Water Scarcity

Climate Change

Industrial Productivity

& Efficiency

Ingersoll Rand Possesses Expertise to

Address Pressing World Challenges

8

Page 9: Ingersoll Investor Presentation

9

Leading market sharesStrong, recognized brandsWell positioned in both

geographic and end markets

Strategic Foundation Continues to Underpin Top-Quartile Performance

Sustainable and Profitable

Growth, Cash Flow and Shareholder Value

Sustained

Growth

Operational

Excellence

Winning

Culture

Cash Flow /

Dynamic

Capital

Allocation

Strategic Foundation Continues to

Underpin Top-Quartile Performance

9

Page 10: Ingersoll Investor Presentation

10

Steady operating performance improvement

$11.5

$12.0

$12.5

$13.0

$13.5

$14.0

2013 2014 2015 2016

Net Revenue

3% CAGR

In Billions

$0.00

$1.00

$2.00

$3.00

$4.00

$5.00

2013 2014 2015 2016

Adjusted EPS

0%

5%

10%

15%

20%

25%

2013 2014 2015 2016

Cash Flow ROIC

6 Ppts

16% CAGR

2.3 Ppts

Steady Operating Performance Improvement

10

0%

2%

4%

6%

8%

10%

12%

14%

2013 2014 2015 2016

Adjusted Operating Margin

Page 11: Ingersoll Investor Presentation

11

2013 2014 2015 2016

1,345**

810862

985**

Strong Balance Sheet and Free Cash Flow

$ Millions YE 13 YE 14 YE 15 YE 16

Cash 1,937 1,705 737 1,715

Debt 3,521 4,224 4,218 4,070

Net Debt 1,584 2,519 3,481 2,355

Free Cash Flow$ Millions

*Reported – includes Allegion security business and excludes restructuring and one-time spin costs and refinancing premium

**Excludes the impact of the IRS agreement and restructuring in 2015 and excludes restructuring and the proceeds on the sale of

Hussmann in 2016

Post Security

Spin

1,151*

• 2011 to 2016 avg. FCF % of net income = 100%

• 2016 FCF % of adjusted net income = 121%

• FCF increase from higher operating results and working

capital management.

$5.14/share

11

Page 12: Ingersoll Investor Presentation

12

Strategic Business

Investment

Maintained Strong

Balance Sheet

at BBB Metrics

Digital

Energy efficiency

Channel Expansion

No meaningful debt

maturities until 2018

Building value through

acquisitions

Working on our pipeline of

targets

$0.64

$0.84

$1.00

$1.16

$1.36

$1.60

2012 2013 2014 2015 2016 2017F

Share Repurchase – Minimum Offset

Dilution from Benefits Program

2016: Repurchased 4.9M shares

for $250M

2016 dividend increased to $1.60/

share

20% annual CAGR 2012 to 2017

Competitive Dividend Payout

36

55

76

98 103

108

2011 2012 2013 2014 2015 2016

Cumulative share repurchase

2011 to 2016 --108 million shares

2016 Dynamic Capital Allocation Focused on Delivering High Returns

12

Page 13: Ingersoll Investor Presentation

13

• Strong momentum and further upside

‒ Attractive end markets

‒ Leading brands and growth through

innovation

‒ Substantial position in developing

markets with significant potential

• Excellent management team executing

consistently on strategy

• Value creation model delivers

sustainable results and returns to

shareholders

‒ Growth

‒ Operational Excellence

‒ Dynamic capital allocation

Much Progress…More Opportunity Ahead

13

Page 14: Ingersoll Investor Presentation

Appendix

Page 15: Ingersoll Investor Presentation

RESIDENTIAL HVAC

Heating, cooling, thermostat controls and home automation for

the residential market

COMMERCIAL HVAC

Air conditioning systems, services and solutions. Innovative

solutions geared toward making high performance buildings

reliable and safe, as well as healthy, comfortable and efficient

TRANSPORT REFRIGERATION

Manufacturing and innovation of transport temperature control

systems for a variety of mobile applications, including trailers,

truck bodies, buses, shipboard containers and rail cars

HVAC SERVICES AND PARTS

A complete selection of innovative parts, options and

accessories for optimal performance and reliability

Our Climate Businesses

15

Page 16: Ingersoll Investor Presentation

COMPRESSION TECHNOLOGIES AND SERVICES

MATERIAL HANDLING

FLUID MANAGEMENT

CLUB CAR

POWER TOOLS

Rotary, centrifugal and reciprocating air compressors,

and treatment products with Comprehensive multi-

year service agreements, audits, parts, and

accessories

Hoists, winches and systems for

moving and positioning loads

Pumps and systems for fluid

handling, transfer, and application

Golf, commercial and utility

vehicles for transportation

Professional tools for fastening,

drilling, and surface preparation

Our Industrial Businesses

16

Page 17: Ingersoll Investor Presentation

Fourth-Quarter 2016 Results

February 1, 2017

Page 18: Ingersoll Investor Presentation

18

Leading market sharesStrong, recognized brandsWell positioned in both

geographic and end markets

Strategic Foundation Continues to Underpin Top-Quartile Performance

Sustainable and Profitable

Growth, Cash Flow and Shareholder Value

Sustained

Growth

Operational

Excellence

Winning

Culture

Cash Flow /

Dynamic

Capital

Allocation

2

Page 19: Ingersoll Investor Presentation

19

Consistent Progress Against Key Metrics*

Net Revenue

Operating Margin

Adj. Continuing EPS*

Free Cash Flow*

Versus 2015

+2% reported

+3% organic

+60 bps

* Includes certain Non-GAAP financial measures. See the company’s Q4 2016 earnings release for additional details and

reconciliations.

+11%

+37%

Full Year 2016

$13,509M

11.6%

$4.13

$1.35B>100% adj. net income

• FCF was 121% of adjusted net income*

• Full-year operating leverage of 44%

• Repurchased ~4.9M shares for $250M in 2016

3

Page 20: Ingersoll Investor Presentation

20

4

Steady Operating Performance Improvement

$11.5

$12.0

$12.5

$13.0

$13.5

$14.0

2013 2014 2015 2016

Net Revenue

3% CAGR

In Billions

$0.00

$1.00

$2.00

$3.00

$4.00

$5.00

2013 2014 2015 2016

Adjusted EPS

0%

5%

10%

15%

20%

25%

2013 2014 2015 2016

Cash Flow ROIC

6 Ppts

16% CAGR

0%

2%

4%

6%

8%

10%

12%

14%

2013 2014 2015 2016

Adjusted Operating Margin

2.3 Ppts

Page 21: Ingersoll Investor Presentation

21

• Continued strong operating results

– FCF $353M in Q4; $1.35B 2016

– Combined operating results for segments exceeded guidance

• EPS miss vs guidance driven by discrete items

• Robust Commercial & Residential performance– Commercial bookings up high-single digits & Residential bookings up low-teens

– Margin expansion in both Commercial and Residential

Key Takeaways Q4 2016

• Industrial business steady on recovery path– Revenue up sequentially vs. Q3

5

Page 22: Ingersoll Investor Presentation

22

Q4 2016 Guidance to Actual Bridge

Q4 2016 Adjusted EPS Guidance (at mid-point) $0.91

Operations earnings 0.01

Corporate Costs (0.04)

Foreign Exchange Losses (0.01)

Higher Tax rate (0.03)

Q4 Actual Adjusted EPS $0.84

• Combined operating results for Climate & Industrial exceeded guidance.

• Higher than anticipated corporate costs were driven by stock-based and

annual incentive-based compensation and increased IT infrastructure and

security investments.

• Higher than anticipated profits from high tax jurisdictions caused an increase

in the tax rate.

Highlights

6

Page 23: Ingersoll Investor Presentation

23

Q4 Total Company Performance

Operating MarginNet Revenue

10.8%

10.3%

Q4 '15 Q4 '16

$3,326 $3,359

Q4 '15 Q4 '16

14.2%

13.4%

Q4 '15 Q4 '16

+1%

+2%Organic

-50 bps

Adj. Operating Margin*

11.3% 10.8%

Adj. OI + D&A %**

* Adjusted margin excludes restructuring in 2015 and 2016

** Adjusted operating income + depreciation and amortization divided by revenue

-80 bps

• Revenue up 1%, +2% organic

• Adj. margin 10.8%, down 50 bps Y-O-Y

• Adj. EPS of $0.84 , down 11%

Highlights

7

Page 24: Ingersoll Investor Presentation

24

8

Y-O-Y

%

Change

Reported Organic

Q1 2015 3% 5%

Q2 2% 4%

Q3 (2%) 1%

Q4 1% 2%

Q1 2016 1% 4%

Q2 2% 3%

Q3 2% 3%

Q4 6% 7%

Climate C

Commercial HVAC + low-teens

- N. America + low-teens

- L. America + low-teens

- EMEA + mid-single digits

- Asia + high-teens

Residential HVAC + low-teens

Transport + mid-single digits

Total + 9%, +10% Organic

Industrial

Compression Tech - low-single digits

Industrial Products - low-single digits

Small Elec. Vehicle + low-single digits

Total - 2%, -1% Organic

Y-O-Y Change in Organic Bookings

Very Strong Q4 Bookings Led by Commercial and Residential Businesses

Page 25: Ingersoll Investor Presentation

25

North AmericaEurope

Asia

Latin America

Climate

Industrial

Climate

Industrial

Revenue change Y-O-Y Q4 Reported Q4 Organic

Climate +3% +4%

Industrial -4% -3%

Total +1% +2%

Climate

Industrial

Climate

Industrial

Middle East/Africa

Climate

Industrial

C O N S O L I D A T E D R E S U L T S

Q4 Segment Organic Revenue Change by Region

9

Page 26: Ingersoll Investor Presentation

26

E n t e r p r i s e

Lower Q4 Margin Primarily due to Steel Inflation and Higher Than Anticipated Corporate Costs

• Improvements in material productivity offset by other inflation, including higher

than anticipated corporate costs resulted in a 40 bps headwind

• Solid operational performance offset by steel inflation

• The company continues to invest in products, while expanding channels

Highlights

10.8% (0.2) (0.3) 10.3%

4Q 2015 Volume / Mix / FX Price/MaterialInflation

Productivity/OtherInflation

Investment/Other 4Q 2016

0.4 (0.4)

(0.2) Investment

(0.1) Other/Rest

-50 bps

10

Page 27: Ingersoll Investor Presentation

27

C L I M A T E S E G M E N T

Q4 Strong Commercial and Residential HVAC Offsetting Transport Results

Operating MarginNet Revenue

12.9%13.6%

Q4 '15 Q4 '16

$2,492 $2,559

Q4 '15 Q4 '16

15.4% 15.8%

Q4 '15 Q4 '16

+3%

+4%Organic

+70 bps

Adj. OI + D&A %**

+40 bps

Adj. Operating Margin*

12.9% 13.6%

* Adjusted margin excludes restructuring in 2015 and 2016

** Adjusted operating income + depreciation and amortization divided by revenue

• Strong Commercial and Residential HVAC revenue growth

• Strong unitary and aftermarket

• Operations performance delivered 70 bps of adjusted operating margin improvement

Highlights

11

Page 28: Ingersoll Investor Presentation

28

I N D U S T R I A L S E G M E N T

Q4 Organic Revenues Declined by 3%

12.7%

10.5%

Q4 '15 Q4 '16

Operating Margin

$834$800

Q4 '15 Q4 '16

Net Revenue

15.8%

13.5%

Q4 '15 Q4 '16

-4%

-3%Organic

-220 bps

Adj. OI + D&A %**

-230 bps

Adj. Operating Margin*

13.8% 11.4%

* Adjusted operating margin excludes restructuring in 2015 and 2016

** Adjusted operating income + depreciation and amortization divided by revenue

• Q4 performance slightly exceeds revenue and operating margin guidance

• Continuing initiatives to drive margin improvements

Highlights

12

Page 29: Ingersoll Investor Presentation

29

2013 2014 2015 2016

1,345**

810862

985**

Strong Balance Sheet and Free Cash Flow

$ Millions YE 13 YE 14 YE 15 YE 16

Cash 1,937 1,705 737 1,715

Debt 3,521 4,224 4,218 4,070

Net Debt 1,584 2,519 3,481 2,355

Free Cash Flow$ Millions

*Reported – includes Allegion security business and excludes restructuring and one-time spin costs and refinancing premium

**Excludes the impact of the IRS agreement and restructuring in 2015 and excludes restructuring and the proceeds on the sale of

Hussmann in 2016

Post Security

Spin

1,151*

• 2011 to 2016 avg. FCF % of net income = 100%

• 2016 FCF % of adjusted net income = 121%

• FCF increase from higher operating results and working

capital management

$5.14/share

13

Page 30: Ingersoll Investor Presentation

30

2016 Dynamic Capital Allocation Focused on Delivering High Returns

Strategic Business

Investment

Maintained Strong

Balance Sheet

at BBB Metrics

Digital

Energy efficiency

Channel Expansion

No meaningful debt

maturities until 2018

Building value through

acquisitions

Working on our pipeline of

targets

$0.64

$0.84

$1.00

$1.16

$1.36

$1.60

2012 2013 2014 2015 2016 2017F

Share Repurchase – Minimum Offset

Dilution from Benefits Program

YTD 2016: Repurchased 4.9M shares

for $250M

Dividend increased to $1.60 / share

20% annual CAGR 2012 to 2017

Competitive Dividend Payout

36

55

76

98 103

108

2011 2012 2013 2014 2015 2016

Cumulative share repurchase

2011 to 2016 --108 million shares

14

Page 31: Ingersoll Investor Presentation

Guidance

Page 32: Ingersoll Investor Presentation

32

2017 Forecast for End-Market Performance

End Markets

Americas EMEA Asia Guidance

Commercial HVAC Up mid-single digits

Residential HVAC Up mid-single digits

Transport Down low-single digits

Compression-related

& Industrial ProductsDown low-single digits

Golf / Utility Flat/Up low-single digits

Organic Revenue

16

Page 33: Ingersoll Investor Presentation

33

2017 Enterprise Guidance

FY Guidance

Climate

‒ Revenue Reported

‒ Revenue Organic

~3%

~4%

Adjusted Operating Margin 14.5% to 15.0%

Industrial

‒ Revenue Reported

‒ Revenue Organic

~-2%

~-1%

Adjusted Operating Margin 11.0% to 12.0%

Total

‒ Revenue Reported

‒ Revenue Organic

~2%

~3%

Adjusted Operating Margin 12.2% to 12.6%

17

Page 34: Ingersoll Investor Presentation

34

2017 Guidance: Full-year Continuing Adjusted

EPS $4.30 to $4.50

Full Year

Y-O-Y change in revenue

• Reported

• Organic

~2%

~3%

EPS continuing $4.15 to $4.35

Restructuring – (add back) ($0.15)

EPS continuing – adjusted $4.30 to $4.50

EPS – discontinued ($0.13)

Share Count – Millions ~262

Free Cash Flow $1.1B to $1.2B

Tax Rate 21% to 22%

Corporate G&A ~$240M

CAPEX ~$250M

18

Page 35: Ingersoll Investor Presentation

35

2017 Capital Allocation Priorities

• 2017 expected FCF range of $1.1B to $1.2B

• Continued investment in the core business

- Technology, channel expansion and productivity

enhancements

• Dividends of ~$420M ($1.60 per share, annualized)

• Target deployment of $1.5B for share buybacks and

acquisitions combined

- EPS guidance includes $250M (of $1.5B) share

buyback to offset dilution

19

Page 36: Ingersoll Investor Presentation

36

• U.S. Manufacturing

- In-region for-region manufacturing and supply chain strategy

- Sourcing with local U.S. vendors to lower manufacturing cycle

time

- ~95% of finished goods sold in U.S. are manufactured in the U.S.

Net Exporter

• U.S. Corporate Tax Rate Reduction

- ~65% of revenues from the U.S.

- Pay significant U.S. taxes

- Reduction in the U.S. tax rate benefits Ingersoll Rand’s U.S.-

based earnings

Topics of Interest for 2017

20

Page 37: Ingersoll Investor Presentation

37

Topics of Interest for 2017

• Status of Industrial Segment

- Solid Q4 results

- Growth in food, pharma and tech verticals and aftermarket soft in

general industrial, large compressors and energy

- OPEX gains, restructuring and cost reductions drive improved

operating margins in 2017 despite low-single digit revenue decline

• Status of Climate Segment

- Commercial and Residential HVAC markets continue upward

momentum

- Expect Transport revenues to be down low-single digits Y-o-Y

- N. America trailer industry down low-teens

- Growth in Europe, Asia and in aftermarket partially offset lower

North American trailer revenues

21

Page 38: Ingersoll Investor Presentation

38

Topics of Interest for 2017

• Currency impact on 2017

- ~35% of revenues outside U.S.

- Expect weaker Euro and Asian currencies

- Net currency expected to have a ~1 percentage point drag

on revenues and a ~10 cent negative impact on 2017 EPS

• Price/Cost 2017

- Material inflation in Q4 results

- 2017 - Expect flat nonferrous cost, inflation in steel

- Targeting price/material inflation gap of 10 to 20 basis

points positive

22

Page 39: Ingersoll Investor Presentation

39

• Continued strong 2016 results driven by execution of our business operating

system

• Strong 2016 full-year cash conversion resulted in $1.35B of FCF

• Top-quartile organic growth, EPS growth and cash flow percentage of net

income

• Commercial HVAC business is strong driven by customer demand trends for

energy efficiency and productivity

• Expect continued progress through 2017 for Industrial, albeit quarterly results

may show some cyclicality

• Commodity inflation expected in 2017, primarily driven by steel. We expect

positive price/material cost spread of 10 to 20 basis points.

• 2017 targeted cash deployment of ~$1.5B for share buybacks and acquisitions

and ~$420M of dividends

• Adjusted EPS guidance tied to strength of business; adjusted EPS range of

$4.30 - $4.50

Summary: Top Quartile Performance with Industrial Improving

23

Page 40: Ingersoll Investor Presentation

Appendix

Page 41: Ingersoll Investor Presentation

41

Q4 Organic Revenue Up 2% Year-Over-Year

Reported 2015 2016

Q1 Q2 Q3 Q4 FY Q1 Q2 Q3 Q4 FY

Climate 6% 2% 4% 2% 3% 3% 4% 3% 3% 3%

Industrial 7% (1%) (2%) 5% 2% (7%) (4%) Flat (4%) (4%)

Total 6% 2% 3% 3% 3% Flat 2% 2% 1% 2%

2013

Organic* 2015 2016

Q1 Q2 Q3 Q4 FY Q1 Q2 Q3 4Q FY

Climate 9% 5% 8% 5% 7% 4% 5% 3% 4% 4%

Industrial 4% (4%) (2%) (2%) (1%) (5%) (3%) 1% (3%) (3%)

Total 8% 3% 6% 3% 5% 2% 3% 3% 2% 3%

*Organic revenues excludes acquisitions and currency 25

Page 42: Ingersoll Investor Presentation

42Flat Organic

-7%

5%

-3%

-10%

5%

Reported

Organic*

*Organic revenues excludes acquisitions and currency

Q4 Revenue Up 1% and Organic Up 2%

3%

4%

-3%

Climate

Industrial

ReportedOrganic*-4%

Segment Revenue Change

Geographic Revenue Change

Americas

Europe, Middle

East, Africa

Asia

N.A. Organic +6%

26

Page 43: Ingersoll Investor Presentation

43

Q4 2016 Y-O-Y Revenue Change

Reported Organic

Climate

- Commercial HVAC + Low-single + Mid-single

- Residential HVAC + Low teens + Low-teens

- Transport - Mid-single - Mid-single

Total Climate 3% 4%

Industrial

- Compression-related Products - Mid-single - Low-single

- Industrial Products - High-single - High-single

- Small Electric Vehicle + Low-single + Low-single

Total Industrial - 4% - 3%

Total Company 1% 2%

27

Page 44: Ingersoll Investor Presentation

44

Full-Year 2017 Guidance Bridge

2016 EPS Continuing Operations (GAAP)

2016 Restructuring + other one-time items*

$5.52

(1.39)

Operations – includes ($0.15) of restructuring 0.29 to 0.49

Currency (0.10)

Investments (0.15)

Tax rate/other (0.02)

2017 EPS Continuing Reported (GAAP) $4.15 to $4.35

2017 forecast restructuring (add back) (0.15)

2017 Continuing EPS (Adjusted) $4.30 to $4.50

*Includes restructuring, Hussmann gain on sale and 4Q legal settlement

28

Page 45: Ingersoll Investor Presentation

45

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 closed/completed 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.

• Acquisition growth rate impacts from 2015 versus 2014 for both net revenues and orders are calculated by excluding

the net revenues and orders from companies acquired in 2015. We are adjusting the 2015 to 2014 growth rate

comparisons for the Engineered Centrifugal Compression business acquired in January 2015 and reported in our

Industrial segment, and the Frigoblock acquisition completed in March 2015 and reported in our Climate segment, to

allow for a direct comparison of operating results to prior periods.

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

• Adjusted operating income is defined as GAAP operating income plus restructuring expenses in 2016. In 2015

acquisition-related Inventory Step-up costs were also excluded from this measure. Please refer to the reconciliation of

GAAP to non-GAAP measures on tables 3 & 4 of the news release.

In 2016 Adjusted EPS is defined as GAAP EPS plus restructuring expenses and legal settlement, less the gain

recognized on the sale of the Hussmann equity interest in Q2 2016, net of tax impacts and a legal matter. In 2015

Adjusted EPS was defined as GAAP EPS plus restructuring expenses, acquisition inventory step-up costs, Venezuela re-

measurement of monetary assets and the IRS agreement, net of tax impacts. Please refer to the reconciliation of GAAP

to non-GAAP measures on tables 3 & 4 of the news release.

Legal Settlement of a lawsuit originally filed by a customer in 2012. The lawsuit related to a commercial HVAC contract

entered into in 2001, prior to our acquisition of Trane U.S. Inc. and the charge in the fourth quarter of 2016 represents the

settlement and related legal costs.

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Non-GAAP Measures Definitions

Free cash flow in 2016 and 2015 is defined as net cash provided by operating activities, less capital expenditures,

plus cash payments for restructuring. In 2015 this definition also excluded the cash impact of the IRS agreement

which occurred in the third and fourth quarters. Please refer to the free cash flow reconciliation on table 8 of the

news release.

Cash flow return on invested capital is defined as annual free cash flow divided by the sum of gross fixed assets,

receivables and inventory less accounts payables

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

December 31) by the annualized revenue for the period (e.g. reported revenues for the three months ended

December 31 multiplied by 4 to annualize for a full year).

Adjusted effective tax rate for Q4 2016 is defined as the ratio of income tax expense, plus or minus the tax effect

of adjustments for restructuring costs and legal settlement, divided by earnings from continuing operations before

income taxes plus restructuring expenses and legal settlement. Q4 2015 adjustments were comprised of

restructuring costs and acquisition inventory step-up charges. This measure allows for a direct comparison of the

effective tax rate between periods excluding adjustments.

Adjusted OI + D&A is defined as adjusted operating income plus depreciation and amortization expense.

Operating leverage is defined as the ratio of the change in adjusted operating income for the current period (e.g.

Q4 2016) less the prior period (e.g. Q4 2015), divided by the change in net revenues for the current period less

the prior period. 30

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