Ingersoll Rand Acquires Friulair to Expand Air Treatment Capabilities

Rhea-AI Summary

Ingersoll Rand (NYSE: IR) acquired Friulair S.r.l. for approximately $146M, increasing its scale of air dryer business, adding new chiller and heat pump technologies, and enhancing penetration of food and beverage and pharmaceutical end markets. The acquisition is expected to reduce the purchase multiple to mid-single digits by year three of ownership, with Adjusted EBITDA margins in excess of 30%.

Insights

Market Research Analyst

Ingersoll Rand's acquisition of Friulair represents a strategic expansion within the industrial technology sector, particularly in air treatment solutions. The deal, valued at approximately $146 million, is expected to bolster Ingersoll Rand's presence in the food and beverage and pharmaceutical industries—sectors that demand high-quality air treatment for their operations. The purchase price reflects an attractive low double-digit Adjusted EBITDA multiple, which is anticipated to decrease to mid-single digits by the third year post-acquisition, suggesting a favorable cost synergy and integration plan.

The acquisition's strategic merit lies in its potential to enhance Ingersoll Rand's product portfolio with Friulair's expertise in chillers and heat pumps, as well as its established manufacturing capabilities in Italy and Thailand. This geographical expansion could facilitate Ingersoll Rand's penetration into new markets and strengthen its global supply chain. Investors should monitor the integration process closely, as the successful deployment of Ingersoll Rand Execution Excellence (IRX) will be critical to achieving the projected Adjusted EBITDA margins in excess of 30%.

Financial Analyst

From a financial perspective, the acquisition's impact on Ingersoll Rand's balance sheet and future earnings is significant. The all-cash transaction suggests a confident investment by Ingersoll Rand in its growth strategy, which could be indicative of a strong liquidity position. The expected Adjusted EBITDA margins in excess of 30% by the third year of ownership indicate a highly accretive acquisition, potentially leading to an increase in shareholder value over time.

Investors should consider the implications of the synergies that are projected to be realized, as they are a critical factor in justifying the acquisition's valuation. The company's track record in achieving such synergies and executing on past acquisitions will be a key determinant of the market's confidence in the projected financial outcomes. Additionally, the focus on end markets such as food and beverage and pharmaceuticals is particularly noteworthy as these sectors have shown resilience and steady growth, which could provide a stable revenue stream for Ingersoll Rand.

Industrial Analyst

The acquisition of Friulair by Ingersoll Rand underscores the importance of specialized industrial technologies in the compressed air market—a sector that is crucial for a wide range of manufacturing processes. The addition of new chiller and heat pump technologies to Ingersoll Rand's portfolio is expected to enhance the company's competitive edge by offering a more comprehensive range of products to meet the stringent requirements of the food and beverage and pharmaceutical industries.

Understanding the technical synergies between Ingersoll Rand's existing air dryer business and Friulair's product lines is essential. The integration of advanced drying, filtration and cooling technologies from Friulair could lead to improved product performance and efficiency, which are key selling points for customers in these critical sectors. The expansion of manufacturing capabilities to Italy and Thailand also suggests a strategic move to optimize production and distribution networks, potentially reducing costs and improving delivery times to key markets.

• Increases scale of air dryer business and adds new chiller and heat pump technologies and production capabilities
• Enhances penetration of food and beverage and pharmaceutical end markets
• Attractive low double-digit Adjusted EBITDA purchase multiple, which is expected to be reduced to mid-single digits by year three of ownership after realization of expected synergies and deployment of Ingersoll Rand Execution Excellence (IRX)

DAVIDSON, N.C.--(BUSINESS WIRE)-- Ingersoll Rand Inc. (NYSE: IR), a global provider of mission-critical flow creation and industrial solutions, closed on the acquisition of Friulair S.r.l. (“Friulair”) in an all-cash upfront purchase price of approximately $146M.

Based in Italy, Friulair is recognized globally for its design and production of dryers, filters, aftercoolers, and accessories for the treatment of compressed air as well as its chiller product line. The addition of Friulair will increase the scale of Ingersoll Rand’s air dryer business, significantly increasing the company’s access to the original equipment manufacturer channel and will add new chiller production capabilities. It also adds manufacturing locations in Cervignano del Friuli, Italy and Si Racha Chon Buri, Thailand.

Friulair employs approximately 215 people and has approximately $65 million in revenue. Through the realization of synergies and the deployment of IRX, Ingersoll Rand expects to realize Adjusted EBITDA margins in excess of 30% by year three of ownership.

“Acquiring Friulair will give us the opportunity to accelerate growth across food and beverage and pharmaceutical end markets, in addition to scaling our existing air treatment business,” said Vicente Reynal, chairman and chief executive officer of Ingersoll Rand. “I am excited to welcome the Friulair team into the Ingersoll Rand family.”

Friulair will join Ingersoll Rand’s Industrial Technologies and Services (IT&S) segment.

About Ingersoll Rand Inc.

Ingersoll Rand Inc. (NYSE:IR), driven by an entrepreneurial spirit and ownership mindset, is dedicated to helping make life better for our employees, customers and communities. Customers lean on us for our technology-driven excellence in mission-critical flow creation and industrial solutions across 40+ respected brands where our products and services excel in the most complex and harsh conditions. Our employees develop customers for life through their daily commitment to expertise, productivity and efficiency. For more information, visit www.IRCO.com.

Forward-Looking Statements

This news release contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, including statements related to Ingersoll Rand Inc.’s (the “Company” or “Ingersoll Rand”) expectations regarding the performance of its business, its financial results, its liquidity and capital resources and other non-historical statements. These forward-looking statements generally are identified by the words “believe,” “project,” “expect,” “anticipate,” “estimate,” “forecast,” “outlook,” “target,” “endeavor,” “seek,” “predict,” “intend,” “strategy,” “plan,” “may,” “could,” “should,” “will,” “would,” “will be,” “on track to” “will continue,” “will likely result,” “guidance” or the negative thereof or variations thereon or similar terminology generally intended to identify forward-looking statements. All statements other than historical facts are forward-looking statements.

These forward-looking statements are based on Ingersoll Rand’s current expectations and are subject to risks and uncertainties, which may cause actual results to differ materially from these current expectations. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those indicated or anticipated by such forward-looking statements. The inclusion of such statements should not be regarded as a representation that such plans, estimates or expectations will be achieved. Important factors that could cause actual results to differ materially from such plans, estimates or expectations include, among others, (1) adverse impact on our operations and financial performance due to natural disaster, catastrophe, global pandemics (including COVID-19), geopolitical tensions, cyber events or other events outside of our control; (2) unexpected costs, charges or expenses resulting from completed and proposed business combinations; (3) uncertainty of the expected financial performance of the Company; (4) failure to realize the anticipated benefits of completed and proposed business combinations; (5) the ability of the Company to implement its business strategy; (6) difficulties and delays in achieving revenue and cost synergies; (7) inability of the Company to retain and hire key personnel; (8) evolving legal, regulatory and tax regimes; (9) changes in general economic and/or industry specific conditions; (10) actions by third parties, including government agencies; and (11) other risk factors detailed in Ingersoll Rand’s most recent Annual Report on Form 10-K filed with the Securities and Exchange Commission (the “SEC”), as such factors may be updated from time to time in its periodic filings with the SEC, which are available on the SEC’s website at http://www.sec.gov. The foregoing list of important factors is not exclusive.

Any forward-looking statements speak only as of the date of this release. Ingersoll Rand undertakes no obligation to update any forward-looking statements, whether as a result of new information or development, future events or otherwise, except as required by law. Readers are cautioned not to place undue reliance on any of these forward-looking statements.

View source version on businesswire.com: https://www.businesswire.com/news/home/20240201780962/en/

Investor Relations:

Matthew.Fort@irco.com

Media:

Meghan.Agostinelli@irco.com

Source: Ingersoll Rand Inc.

FAQ

What is the ticker symbol for Ingersoll Rand?

The ticker symbol for Ingersoll Rand is IR.

What did Ingersoll Rand acquire?

Ingersoll Rand acquired Friulair S.r.l. for approximately $146M.

What are the expected Adjusted EBITDA margins by year three of ownership?

Ingersoll Rand expects to realize Adjusted EBITDA margins in excess of 30% by year three of ownership.

How many manufacturing locations does Friulair have?

Friulair has manufacturing locations in Cervignano del Friuli, Italy and Si Racha Chon Buri, Thailand.

How many employees does Friulair employ?

Friulair employs approximately 215 people.

What is the expected impact on the purchase multiple by year three of ownership?

The acquisition is expected to reduce the purchase multiple to mid-single digits by year three of ownership.