Ingersoll Rand Inc.

To others, we ask that each participant limit themselves to one question and one follow-up question before returning to the queue. Thank you. Zach Nagel, Vice President of Investor Relations, you may begin your conference.

Thanks, Operator. Good morning, and thank you for joining us for Ingersoll Rand's second quarter 2019 earnings conference call. This call is being webcast on our website at IngersollRand.com, where you'll find the accompanying presentations. We are also recording and archiving this call on our website. Please go to slide two. Statements made in today's call that are not historical facts are considered forward-looking statements and are made pursuant to the safe harbor provisions of federal securities law. Please see our SEC filings for a description of some of the factors that may cause our actual results to differ materially from our anticipated results. This presentation also includes non-GAAP measures, which are explained in the financial tables attached to our news release. Joining me on today's call are Mike Lamac, Chairman and CEO, and Sue Carter, Senior Vice President and CFO. With that, please go to slide three, and I'll turn the call over to Mike.

Thanks, Zach, and thanks, everyone, for joining us on today's call. I'm proud of our team's performance in the second quarter. Once again, we delivered strong revenue growth, margin expansion, and EPS growth. We welcomed our new precision flow systems team into Ingersoll Rand, and we're well underway towards a separation into two standalone businesses in our proposed strategic combination with our industrial segment in Gardner Denver. With that backdrop, let's get started. Please go to slide three. I'd like to start with a brief overview of the global business strategy that we're executing to deliver consistently strong financial results for our shareholders. Fundamentally, Our strategy is at the nexus of environmental sustainability and impact, which are strong secular tailwinds for our business. The world is continuing to urbanize while becoming warmer and more resource constrained as time passes. We excel at reducing the energy intensity of buildings, reducing greenhouse gas emissions, reducing waste of food and other perishable goods, and we excel in our ability to generate productivity for our customers, all enabled by technology. Unless you think the world is getting cooler, less populated, and less resource constrained as time passes, these strong secular tailwinds will continue to provide opportunity for shareholders and purpose for our vision. As we continue separation, integration, planning, and business transformation activities related to our strategy and combination of our industrial segment with Gardner Denver and move towards creating the premier pure play climate business in 2020, Our aggressive pursuit of excellence in delivering solutions to mitigate the impact of these secular trends only intensifies. Our climate business squarely focuses 100% of our portfolio at the nexus of sustainability and global environmental impact, where our products and services can reduce the impact of these megatrends and create a platform for the company to grow above average global economic conditions. Moving to slide four. I'll spend a few minutes discussing how 2019 has progressed through the first half of the fiscal year and what we're expecting to see through the balance of 2019. The key takeaway is that we remain bullish on our strategy, our end markets broadly, and our ability to execute using our business operating system to deliver against our organic revenue growth and adjusted EPS guidance ranges for fiscal 2019. In fact, today we're raising EPS guidance by $0.05 to approximately $6.40. We expect to deliver top-tier financial performance again in 2019. Commercial HVAC globally, and particularly in North America and Europe, has continued to be very strong for us, and our backlog, incoming order rates, and sales pipeline give us confidence this business will continue to deliver strong results in the second half of 2019. Our residential HVAC business had strong mid-single-digit growth in the second quarter, and we expect this business to continue to deliver strong performance for the full year, supported by a solid residential replacement market. In our industrial segment, we saw healthy order growth in long-cycle projects in our compression technologies business in the second quarter, and we have a favorable outlook for continued long-cycle growth in the second half of the year. Conversely, the short cycle market softened in the second quarter, primarily impacting revenue growth in our core compression technologies and tools businesses, which are both down low single digits. We expect short cycle markets to continue to be challenging throughout 2019. The positive impact of healthy long cycle markets presents a positive setup as we move into 2020 when these orders convert into revenue and operating income given the long lead times associated with these projects. Price realization has been outstanding across our businesses, and we're effectively managing all inflation and tariff-related costs with an 80 basis point spread in the second quarter. As we've highlighted before, we have been effective in managing inflation, and we expect to continue to maintain a positive spread in our target range of 20 to 30 basis points in the second half of the year when we begin to lap the strong price realization in the third and fourth quarters of 2018, and when we begin to see the full impact of the increase in List 3 tariffs on Chinese imports moving from 10% to 25%. Lastly, we continue to expect strong free cash flows in 2019 of equal to or greater than 100% of net income, which will further strengthen our balance sheet and enable us to maintain good optionality. We've deployed significant capital on dividends, acquisitions, and share repurchases over the years, and again, in the first half of the year. We'll continue to follow our dynamic and balanced capital allocation priorities, and we expect to deploy 100% of excess cash over time. Please go to slide five. We delivered solid bookings and revenue growth in virtually all businesses and regions in the second quarter. On the booking side, our largest HVAC businesses continue to lead the way and deliver strong growth with North America and Europe HVAC up high single digits in the second quarter. China was also healthy with low single-digit growth against a very tough comp of low 20s growth in the second quarter of 2018. We also drove strong bookings growth of 8% in our industrial segment versus a tough comp of 8% in the prior year led by compression technologies and small electric vehicles. Compression technologies growth was driven by strong growth in long cycle, partially offset by softness in the short cycle markets. Small electric vehicles growth was driven by successful execution of our consumer vehicle strategy. Transport refrigeration had a significant decline in bookings against very tough comps in 2018, for reasons we've discussed in detail on prior calls. However, As we've said before, these declines don't impact or negate the strong growth in our other transport businesses or impact their ability to grow revenues in 2019 and 20. The transport refrigeration business had extremely strong bookings in 2018 and is returning to historically normal levels of bookings in 2019, but with backlog that is more than two times historical levels. With the strong backlog and solid bookings we're seeing in 2019, We expect this business to deliver solid revenue growth in 2019, and the prospects heading into 2020 continue to look promising. On the revenue side, our largest HVAC businesses continue to deliver very strong growth, with North America, Europe, and residential all up mid to high single digits in quarter two. Transport refrigeration also delivered strong revenue growth. Bringing all the pieces together, we're pleased with our organic bookings and revenue growth performance through the first half. We expect organic revenue growth rates to increase heading into the second half based on healthy backlog, deliveries, and incoming order rates, and remain confident in our 5% to 6% organic enterprise revenue growth target for the full year. Please turn to slide six. We've outlined a number of takeaways for each major business on the next two slides. Commercial HVAC continues to be very strong, particularly in North America and Europe. Our backlog, incoming order rates, and pipeline of projects are driving confidence that we'll continue to see solid growth in the second half of the year. Residential HVAC had solid mid-single-digit growth in quarter two, and we head into the second half of the year, expecting 2019 will shape up to be another good year led by a healthy replacement market. I've talked at length about transport refrigeration, which continues to be led by North America trailer, truck, APUs, and aftermarket. Based on our record backlog and healthy incoming order rates, we remain confident that our transport business will deliver another solid year in 2019. Please turn to slide seven. In our compression technologies business, we're seeing healthy growth in long cycle markets and softness in short cycle markets. The long cycle business strength positions us well for good growth in late 2019 and in 2020 as these orders convert into revenue. Small electric vehicles is having a great year driven by successful execution of our consumer vehicle strategy. And now I'd like to turn it over to Sue to provide more details on the quarter. Sue?