Ingersoll Rand Inc.

Good morning, and welcome to the Ingersoll-Rand Q2 2020 earnings conference call. My name is Megan, and I will be your operator for the call. The call will begin in a few moments with a speaker remarks and then a Q&A session. All calls are on mute. To ask a question, please press star 1 on your telephone keypad. Please limit yourself to one question and one follow-up. I would like to introduce Vic Kenney. You may begin your conference.

Thank you, and welcome to the Ingersoll-Rand 2020 second quarter earnings call. I'm Vic Kinney, Ingersoll Rand's Chief Financial Officer, and with me today is Vicente Reynold, Chief Executive Officer. Our earnings release, which was issued yesterday, and a supplemental presentation, which will be referenced during the call, are both available on the Investor Relations section of our website, www.irco.com. In addition, a replay of this morning's conference call will be available later today. Before we get started, I would like to remind everyone that certain of the statements on this call are forward-looking in nature and are subject to the risks and uncertainties discussed in our previous SEC filings, which you should read in conjunction with the information provided on this call. For more details on these risks, please refer to our annual report on Form 10-K filed with the Securities and Exchange Commission and our current report on Form 8-K filed with the Securities and Exchange Commission on May 1st, 2020, which are available on our website. Additional disclosure regarding forward-looking statements is included on slide two of the presentation. In addition, in today's remarks we'll refer to certain non-GAAP financial measures. You can find a reconciliation of these measures in the most comparable measure calculated and presented in accordance with GAAP in our slide presentation and in our earnings release, which are both available on the investor relations section of our website. Turning to slide three, on today's call we'll provide an update on the integration efforts of the company in the current operating environment as well as review our second quarter total company and segment highlights. We will conclude today's call with a Q&A session. As a reminder, we ask that each caller keep to one question and one follow-up to allow for enough time for other participants. At this time, I will now turn it over to the Sente Reynal Chief Executive Officer.

Thanks, Vic, and good morning to everyone. I want to start today's call by thanking all of our employees around the world. The COVID-19 pandemic has presented unprecedented challenges to all of our communities around the world, and I am extremely proud of how our employees have stepped up to continue to serve our customers, keep our community safe, and execute on the strategy of the company. This speaks highly of the culture we're building here at Ingersoll REN, and I appreciate all the hard work and dedication that our teams continue to display. Turning to slide four, I want to share more about the culture and some of the initiatives we're taking. Our execution excellence permeates the whole company and guides how we connect our values, strategic imperatives, and execution tools. We do this to drive our company purpose, which is lean on us to help you make life better. With IRX, we're now doing over 150 weekly sessions, but we're able to mentor over 2,000 leaders globally every week on how to drive immediate execution. We know that to create a unique and single culture, constant and open communication is imperative. So, a few highlights to point out. First, during this no travel time, we wanted to create a more direct and open dialogue with our individual sightings. So, Owning Our Future forums were born from this idea. These are virtual one hour micro town halls with individual sites where 45 minutes are spent on Q&A specific to that location. These have been some of the most meaningful conversations I have had with employees over the last three months. In just the last 30 days, I have been able to interact directly and live with over 6,000 of our global employees. Second, the team designed a powerful, interactive, and fun purpose and values virtual curation session. Employees are having fun as they really get to know and decide how to apply our values every day in the roles. Third, we recognized the responsibility we had as a newly combined company to create a safe space for employees to have deep conversations on important topics. We recently hosted five sessions where black employees openly spoke about their racial experiences. And we had a lot of employees attending, listening, and reflecting. And it was an emotional and inspirational sessions. So, when you think about everything that has happened since the merger took place, including the pandemic and its impact on the work environment, as well as the structuring and streamlining of the organization, it's very highly of the foundation we're building at Invisalign as we're still able to maintain a strong sense of unity, culture, and ownership mindset. And this is what makes us highly differentiated. Moving to slide five, I want to take a moment to update everyone on the integration of the company. and how we're executing in a thoughtful, safe approach linked to our strategic imperatives. The first phase and one that we started even before the formal transaction closed at the end of February is building a strong foundation. As we have indicated a number of times over the past few quarters, our integration planning began in mid-2019, soon after we announced the transaction. Starting first with deploying talent, as I described on a previous slide, we're creating a unified culture across our entire workforce. that is central to who we are. And a major milestone will come later this summer when we plan to issue the All-Employee Equity Grant that we view as central to our strategy in terms of driving accelerated engagement, ownership mindset, and sustainable long-term shareholder value performance. This foundation can also be seen in the areas of expanding margins and allocating capital effectively. With the help of IRX tools, we have been able to accelerate our synergy delivery with a distinct focus on reducing structural cost. We have also built a strong balance sheet with ample liquidity. And finally, we're embarking on our newest strategy of operating sustainability. As you will see on the following slide, we're taking very proactive efforts to embed sustainability through an ESG mindset and develop a cadence of transparency and disclosure as we move forward. As we look ahead, having a strong foundation in place will allow us to transition to the next phase of our integration, which is pivoting for growth. Growth in the organization will take on many fronts, whether it be organic growth, where we have initiatives designed to drive further product and service penetration, or inorganic growth, as we have a large funnel of bolt-on M&A opportunities, giving our $40 billion plus addressable market. And as we continue to optimize the business, this will lead us to the third phase of our integration, which is portfolio optimization. While our focus right now is to continue to improve the underlying nature of our businesses, we will continue to thoughtfully evaluate the assets within the portfolio, as well as adjacent markets that allows us to grow the current $40 billion addressable market I just mentioned. I want to talk about progress we're making on our newest strategic imperative, which is operating sustainably. It starts with building a culture that embraces various points of views, backgrounds, and experiences. And I believe that it must start at the top of the house. Our board of directors is 50% diverse. We want to be surrounded by the best, and that means high levels of diversity in race, gender, thought processes, and perspectives. I have been laser focused on this in the last few years. And having such a strong experience board, in addition to being 50% race and gender diverse, it's a point of pride. Our culture is also behind the strength of our COVID-19 response and why customers, employers, and communities are leaning on us. Increased reporting on ESG measures is important. Recently, we completed a materiality assessment that determine our most impactful ESG topics. And details of this are in our first sustainability report published last week and can be found on the investor relations section of our website. More important are the actions we're already taking. One example here is on energy use, which in our facility in Wuzhen, China, has gone solar. This will reduce the Wuzhen plant CO2 emissions by approximately 3,800 tons every year. And that's equivalent to the electricity used by more than 550 homes. So, let's talk about putting operating sustainably along with our other four strategies into execution and move to page seven to talk about our Q2 financial highlights. Overall, the business performed very well given the expected revenue decline due to COVID-19 pandemic and the downturn in the high-pressure solution segment. As we indicated during our last earnings call, Our goal was to manage what's within our control, focusing on protecting the bottom line and ensuring ample liquidity. The teams did exactly that as they delivered adjusted EBITDA of $241 million and adjusted EBITDA margins of 19.1%. This was a 270 basis point improvement from the first quarter on relatively flat revenue. On a year-over-year basis, margins were down 50 basis points. but when adjusted for the high-pressure solution segment, total company margins improved 160 basis points. The teams executed very well as we continued to accelerate synergies, which now stand at $125 million on an annualized basis, or 50% of our stated target of $250 million. The teams also managed short-term costs extremely well, which ultimately led to a total company decremental margin of only 22%. From a cash flow and capital structure perspective, we saw similar strong performance in the quarter as free cash flow was 230 million and liquidity now stands at $2.2 billion. Leverage also stayed flat the prior quarter at 2.6 times. Overall, I am very pleased with the efforts of the team as they remain execution focused and delivered strong results despite a challenging microeconomic backdrop. I will now turn over the call to Vic to walk through the financials in more detail. Vic?