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Ingersoll Rand Sales Grow 8% in Third Quarter

Ingersoll-Rand plc, Swords, Ireland, (NYSE:IR), sales in the third quarter 2010 were up 8 percent to $3.7 billion. Excluding currency, sales were up 9 percent. U.S. revenues were up 5 percent, and revenues from international operations increased by 13 percent (up 16 percent excluding currency).

Profit was $232.2 million.

Climate Solutions revenues for the third quarter of 2010 were $2.1 billion, with operating income of $219.7 million. Revenues for the third quarter increased by 9 percent (up 10 percent excluding currency), and operating earnings increased by 22 percent compared with the third quarter of 2009.

On a year-over-year basis, total commercial HVAC revenues increased 6 percent (up 6 percent excluding currency), with a 3 percent increase in equipment and systems revenues and an 11 percent increase in parts, services and solutions. Commercial revenues, excluding currency, increased in all major geographic regions, with strong year-over-year improvements in China and South America. Equipment revenue in North America declined in the quarter, constrained by sluggish non-residential construction markets. However, the company reported the year-over-year rate of decline has diminished since the first half of 2010 and the North American equipment market appears to be reaching a cyclical bottom.

Third-quarter bookings were flat compared with last year, primarily due to more difficult comparisons in service and contracting, as a result of several large performance contracts awarded in the third quarter of 2009. Equipment bookings were up 4 percent, as growth in China more than offset flat orders in North America and Europe.

Thermo King refrigerated transport revenues increased 23 percent in the third quarter compared with last year, with improvements in all geographic regions. Total worldwide refrigerated trailer and truck revenues increased by more than 20 percent compared with last year, reflecting improved activity in both the U.S. and overseas markets. Sea-going container revenues, auxiliary power units and worldwide bus revenues also increased due to improving end-market activity. Thermo King bookings increased approximately 40 percent year-over-year with especially strong orders from European customers.

Hussmann revenues increased by 7 percent compared with the third quarter of 2009 due to significant improvements in the North American display case business. Third-quarter bookings increased by 21 percent from improved order rates from major national accounts and regional customers, as well as easy comparisons with sluggish activity levels last year.

Third-quarter segment operating margin was 10.4 percent, including $11 million of restructuring/productivity investments, an increase of 1.1 percentage points compared with last year. Higher volumes, productivity actions and improved revenue mix offset the negative impact of higher commodity costs.

Industrial Technologies revenues in the third quarter of $624.3 million increased approximately 22 percent (up 24 percent excluding currency) compared with the third quarter of 2009. Air and Productivity revenues increased 24 percent, with volume increases in all major geographic regions. Revenues in the Americas increased 31 percent compared with last year as industrial and commercial markets for both air compressors and tools continued to improve. Air and Productivity Solutions revenues outside the Americas increased by approximately 17 percent (up 21 percent excluding currency) compared with 2009, from improved activity in Asia. Bookings increased 31 percent year-over-year with substantial gains in all geographic regions.

Club Car revenues increased 18 percent compared with the third quarter of 2009, from increased sales for both golf cars and utility vehicles. Bookings declined due to slowing demand in the domestic golf market and more difficult year-over-year comparisons.

Third-quarter operating margin for Industrial Technologies of 12.7 percent, including $10 million of restructuring/productivity investments, increased by 3.9 percentage points compared with 8.8 percent last year due to productivity, higher volumes from recovering industrial markets and new product introductions, and improved pricing, partially offset by inflation.

Residential Solutions includes the Trane and Schlage brands. Third-quarter revenues were $575 million, an increase of approximately 1 percent (up 3 percent excluding currency) compared with 2009.

Total reported residential security revenues decreased 11 percent. North American revenues declined slightly, primarily due to stagnant remodeling and new builder markets and inventory reductions by “big box” customers. South American revenues were down by more than 50 percent, primarily due to significant negative currency translation. Total residential security bookings were down 12 percent year-over-year and flat excluding currency translation.

Residential HVAC revenues increased 4 percent compared with 2009 despite a 1 percent decline in North American HVAC market shipments. The improved sales are attributable to positive product mix in air conditioning systems and from market share gains in residential air conditioning and furnaces. Bookings increased by 8 percent compared to 2009.

Third-quarter segment operating margin of 9.6 percent included $1 million of restructuring/productivity investments. Margins declined somewhat compared with 10.2 percent recorded in 2009 as a 1 percentage point year-over-year improvement in the operating margin of the HVAC business was more than offset by a margin decline in residential security. The segment margin decline was due to commodity price inflation and negative currency comparisons, which combined, offset higher volumes and productivity gains.

Security Technologies third-quarter revenues of $409.8 million declined by approximately 6 percent (down 4 percent excluding currency) compared with the third quarter of 2009. This decrease reflects the ongoing decline in commercial building and remodeling markets, especially in the U.S. and in Europe. Overall segment bookings were down 7 percent and down 4 percent in the Americas. Third-quarter operating margin improved slightly to 22.1 percent, compared with a very strong 21.8 percent in the third quarter of 2009. Third-quarter margins included $2.2 million of restructuring/productivity investments. The operating margin increase was due to cost reduction from productivity gains and improved pricing, which offset lower volumes and commodity inflation.

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