Ingersoll Rand : Reports Strong Second-Quarter Results Continuing EPS of $2.88; Adjusted Continuing EPS*of $1.38

Highlights (versus Q2 2015 unless otherwise noted):

• Company-wide operational execution delivers adjusted continuing EPS up 15 Percent
• Strong cash conversion with year-to-date free cash flow* of $348 million
• Record Q2 operating margins of 13.7 percent - up 1.1 percentage points
• Share growth drives revenues up 2 percent; organic revenues* up 3 percent
• Record Climate bookings, continued weakness in Industrial
• Company increases guidance range for full-year 2016 EPS from continuing operations to $5.47 to $5.57 and adjusted EPS to $4.00 to $4.10

*This news release contains non-GAAP financial measures. Definitions of the non-GAAP financial measures can be found in the footnotes of this news release. See attached tables for additional details and reconciliations.

Excluding the sale of the company's remaining interest in Hussmann and restructuring costs, adjusted continuing EPS was $1.38.

"Ingersoll Rand delivered another strong quarter with top-quartile EPS growth, continued expansion of our enterprise operating margins and excellent free cash flow," said Michael W. Lamach, chairman and chief executive officer. "We continue to invest in strategic growth programs that deliver long-term performance. Our performance in the quarter underscores the strength and diversity of our portfolio and the quality of execution by the Ingersoll Rand team."

• Enterprise revenues were up 2 percent with organic revenues up 3 percent. Organic revenue growth was broad based with U.S. operations up 4 percent and international operations up 3 percent.

• Operating margin was up 1.1 percentage points with adjusted operating margin up 0.8 percentage points. Margin improvement was driven largely by volume, mix improvement, productivity, pricing and material deflation, partially offset by business investment, foreign exchange and other inflation.

• Excluding the Hussmann gain and restructuring, the adjusted tax rate was 20.6 percent. Importantly, the company now expects the full year 2016 tax rate to be in the range of 22 percent to 23 percent, approximately 200 basis points lower than previous guidance.

• Net earnings included $754.4 million, or EPS of $2.88, from continuing operations and an EPS loss of $(0.02) from discontinued operations.

• Second-quarter results included restructuring charges of $(5) million, or $(0.01) per share.

Climate Segment: delivers energy-efficient products and innovative energy services. It includes Trane® and American Standard® Heating & Air Conditioning which provide heating, ventilation and air conditioning (HVAC) systems, and commercial and residential building services, parts, support and controls; energy services and building automation through Trane Building Advantage™ and Nexia™; and Thermo King® transport temperature control solutions.

• Strong revenue growth - up 4 percent and organic up 5 percent.

• Robust bookings growth - up 5 percent and organic up 6 percent.

• Significant operating leverage driving adjusted operating margins up 2.4 percentage points.

  Commercial HVAC

• Revenue growth of mid-single digits both GAAP and organic.

• Regionally, the increase in organic revenues was led largely by high-single digit growth in North America and low-teens growth in Europe. Latin America and Asia also showed modest growth while the Middle East declined, primarily due to challenging market conditions in Saudi Arabia.

• Bookings up mid-single digits with organic bookings up high-single digits. North America HVAC up low-teens.

  Residential HVAC

  • Record revenues, operating and EBITDA margins.

  • Continued strong bookings, up low-teens percentage.

    Transport Refrigeration

• Revenues up low-single digits both GAAP and organic.

• Operating margin expansion on low growth environment. Solid revenue growth in North America and Europe truck and trailer were partially offset by declines in marine containers and auxiliary power units.

• Consistent with overall end market trends, bookings declined in North America trailer and auxiliary power units. International truck and trailer, bus and rail businesses posted modest gains partially offsetting the decline.

  Industrial Segment: delivers products and services that enhance energy efficiency, productivity and operations. The segment includes compressed air and gas systems and services, power tools, material handling systems, ARO® fluid management equipment, as well as Club Car® golf, utility and rough terrain vehicles.

  $, millions	Q2 2016	Q2 2015	Y-O-Y Change	Organic Y-O-Y Change
  Bookings	$708	$754	(6%)	(5%)
  Net Revenues	$753	$785	(4%)	(3%)
  Operating Income	$68.8	$90.7	(24%)
  Operating Margin	9.1%	11.6%	(2.5) PPts
  Adjusted Operating Margin	9.8%	13.3%	(3.5) PPts

• End market conditions continue to be challenging in the Industrial Segment.

• The company remains focused on operational excellence, driving mix to services and new products and maintains focus on cost reductions.

• Adjusted operating margin declined 3.5 percentage points primarily due to lower volumes and mix and other inflation, partially offset by productivity gains and positive price realization. Additionally, capitalized costs related to new product engineering and development of $8 million, or 1.1 percentage points, were reclassified to the income statement in Q2. Excluding this reclassification adjusted operating margins were 10.9 percent.

• Compression Technologies organic revenues were down low-single digits. Equipment bookings down mid-teens. However, bookings for services up approximately 10 percent.
• Industrial products revenues were down mid-teens with fluid management growth offset by declines in material handling and tools.
• Small electric vehicle (Club Car) revenues up mid-single digits driven by growth in golf cars, utility vehicles and aftermarket.

• Regionally, the decline in organic revenues was led by a mid-single digit decline in the Americas and the Middle East. Asia and Europe were up modestly, partially offsetting the decline.

  Balance Sheet and Free Cash Flow

  $, millions	Q2 2016	Q2 2015	Y-O-Y Change
  Free Cash Flow June 30 Y-T-D	$348	$55	$293
  Working Capital/Revenue*	5.6%	5.8%	20 bps improvement
  Cash Balance June 30	$929	$780	$149
  Debt Balance June 30	$4,086	$4,372	($286)

• In Q2, the company delivered strong free cash flow of $394 million; up $159 million.

• Working capital of 5.6 percent improved by 20 basis points.

• Cash balance at June 30 improved by $149 million to $929 million.

The company sold its remaining equity interest in Hussmann Parent, Inc. on April 1, 2016, as part of a transaction in which Panasonic Corporation acquired 100 percent of Hussmann's shares. Ingersoll Rand received net proceeds of approximately $422 million. The 2016 adjusted EPS and cash flow guidance excludes the proceeds from the sale of our interest in Hussmann.