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Ingersoll Rand: 150 Years of Industrial Excellence
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Established in 1871, Ingersoll Rand has over the past 150 years evolved into a serial acquirer with a market cap of $29 billion. Specializing in essential compressor and vacuum technologies, as well as specialized fluid management solutions, the company has demonstrated significant growth over the past three decades, notably growing its revenue and EBIT at an annual growth rate of 13% and 18% respectively. Let’s take a closer look at the history of the company and examine the sources of its success.
Mission-Critical Solutions
Ingersoll Rand is a global serial acquirer and leading supplier of mission-critical compressor and vacuum technology, and highly specialized fluid management solutions. Over the past three decades, the company has grown its revenue and EBIT at a 13% and 18% Compounded Annual Growth Rate (CAGR) respectively, expanding its EBIT margin from 6% to 19% as of 2023E.
Key industries served by Ingersoll Rand include aerospace, automotive, electronics, food and beverage, pharmaceuticals, and textiles. Its compressor systems are integral to these sectors, offering essential services such as providing oil-free air for sensitive electronics manufacturing or powering pneumatic tools in automotive production.
In the mining and construction industries, Ingersoll Rand’s compressor technologies facilitate operations like drilling wells, significantly reducing the time required for such tasks. For instance, the company’s technology makes drilling wells possible in hours instead of weeks. In the life sciences and pharmaceutical industries, they offer oil-free compressor solutions that are FDA-required to ensure contamination-free production environments.
Additionally, Ingersoll Rand’s products find applications in manufacturing sectors such as semiconductor assembly. This broad industry coverage, coupled with a focus on innovation and efficiency, underlines the company’s role as a key player in the global industrial landscape.
In comparison, Swedish Atlas Copco, recognized as one of Ingersoll Rand’s global peers, also operates in similar domains, providing a range of industrial tools and equipment serving various sectors worldwide.
A 150-year Heritage
Founded in 1871 as Ingersoll Rock Drill Company In New York, Ingersoll Rand today boasts a massive organization with over 17,000 employees, over 150 customer centers, and a network of over 65 manufacturing sites across the globe.
Throughout its history, Ingersoll Rand has undergone several transformative changes. In the mid-20th century, under the leadership of people like George Doubleday and subsequent CEOs like Robert H. Johnson and William L. Wearly, the company expanded its product lines and global footprint. These leaders focused on competitive pricing, technological advancements, global expansion through acquisitions, and diversification into new markets.
For example, Wearly’s acquisition of The Torrington Company and the Schlage Lock Company in the late 1960s and early 1970s marked a significant move into diversified areas beyond Ingersoll Rand’s traditional product lines. In the 1950s, for instance, the company introduced groundbreaking products such as the sliding-vane rotary portable compressor unit and the Drillmaster, a self-propelled jumbo drill.
Today, Ingersoll Rand has one of the broadest technology portfolios in mission-critical flow creation, operating under more than 80 premium and well-recognized brands, including CompAir, Trane, Gardner Denver, and Thermo King. The company holds over 2,000 patents, demonstrating its commitment to innovation and technological advancements.
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A Non-Cyclical Compounder?
Ingersoll Rand has significantly enhanced its capabilities in various high-growth and sustainable end markets through strategic acquisitions and product development. The company’s acquisitions of Oxywise and Fraserwoods in October 2023 for a combined all-cash purchase price of approximately $26 million are notable examples.
Oxywise, a Slovakia-based company, specializes in onsite oxygen and nitrogen generating systems, which are used in medical, laser cutting, industrial, and aquaculture applications. Fraserwoods, on the other hand, focuses on the repair and remanufacturing of blowers and pumps, particularly in the vacuum truck market, with a significant portion of its revenue coming from aftermarket services.
Additionally, Ingersoll Rand’s agreement to acquire Howden Roots LLC from Chart Industries further demonstrates its commitment to expanding its product offerings and market reach. Roots, a provider of low-pressure compression and vacuum technologies, is renowned for its expertise in green steel, a sustainable steel production process.
It’s evident that Ingersoll Rand has actively pursued an acquisition-fueled growth strategy. According to its 2023 Investor Day, the company has done a lot of work over the past three years to change its growth profile. They have actively divested non-core cyclical assets and acquired over 41 companies working in sustainable high-growth end-markets.
“We have a platform that we believe is putting us into the early innings of being a premier growth compounder” – President & CEO, Vicente Reynal
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Conclusion
Ingersoll Rand’s evolution from its foundation in 1871 to the major industrial player it is today is a story of strategic growth, innovation, and adaptability. As a serial acquirer with a $29 billion market cap as of December 2023, the company has significantly expanded its operations in mission-critical compressor and vacuum technology, and specialized fluid management solutions. With products and solutions utilized in diverse industries like mining, construction, and life science, Ingersoll Rand's impact is broad and profound. Its technology has revolutionized operations in these sectors, such as enabling faster drilling of wells and providing essential, contaminant-free solutions for the pharmaceutical industry.
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