Question-and-Answer SessionAnd Vik, as I walk over to you, it's been about 5 years since you closed the RMT. Lot's gone on. I think you had a vision then to be the premier industrial compounder. So maybe what's gone right and if there's anything that you wish you could do better?Vikram KiniSenior VP & CFO Yes, for sure. So first of all, Andy, thanks for having us as always here. It's great to be here. Yes, first and foremost, it is kind of crazy. I think it's been 6 years now since 2020 until now, so we're ...

Ingersoll Rand (NYSE:IR) 2026 Conference February 19, 2026 08:50 AM ET Company ParticipantsVik Kini - CFONone - Company RepresentativeConference Call ParticipantsNone - AnalystNoneGetting it started again, we are very excited to have Ingersoll Rand with us. We've got Vik Kini, who is the CFO of Ingersoll Rand. And Vik, as I walk over to you, it's been about five years since you closed the RMT. A lot's gone on. I think you had a vision then, to be the premier industrial compounder. So maybe what's gone right ...

Demand Environment - The demand environment in the U.S. is showing positive momentum, particularly in Q4, with organic growth in orders across both segments [1] - The peak of uncertainty in North America appears to be behind, with encouraging signs of recovery coming out of Q4 [2] - Globally, there is a similar trend, with positive organic growth in orders observed in markets like China, which accounts for about 10% of the company's revenue [2]

Ingersoll Rand (NYSE:IR) FY Conference Summary Company Overview - **Company**: Ingersoll Rand - **Date of Conference**: February 18, 2026 Key Industry Insights - **Demand Environment**: - Positive momentum observed in Q4 2025, with organic growth in orders across segments, particularly in North America and China, which accounts for about 10% of revenue [4][6] - Leading indicators like PMI are showing positive inflections, suggesting a potential recovery in the U.S. short-cycle industrial market [8][10] - The company is maintaining a prudent outlook for 2026, with expectations for organic growth to be modest [10][29] - **Headwinds**: - Previous headwinds from various global events (e.g., China EV build-outs, European market fluctuations post-Ukraine invasion) are no longer significant concerns as the company moves into 2026 [14][17] - The company does not foresee new comparable headwinds emerging in the near term [14][17] Financial Performance - **Recurring Revenue Growth**: - Recurring revenue exceeded $450 million in 2025, up from approximately $200 million in 2023, indicating more than a doubling of this revenue stream [24][25] - Growth in recurring revenue is broad-based across regions and product categories, with compressors in the U.S. being the largest contributor [25][27] - **Profitability**: - The recurring revenue model, particularly the Package Care segment, has gross margins between 60%-70%, contributing to overall profitability [41][46] - The company achieved a 29% EBITDA margin in ITS, with expectations for continued margin expansion despite tariff headwinds [46][61] Market Dynamics - **Tariff Impact**: - The company has experienced tariff exposure but has managed to offset these costs through pricing strategies, maintaining a dollar-neutral price-cost dynamic [54][55] - The market has responded rationally to tariff impacts, with pricing actions taken to mitigate margin dilution [54][58] - **Competitor Landscape**: - Competitors have varied responses to tariff impacts, with some implementing significant price increases while others balance pricing strategies [57][58] Strategic Focus - **Capital Allocation**: - The company plans to allocate 80%-85% of free cash flow towards M&A, with expectations for continued bolt-on acquisitions in the $1 billion range [95][99] - Share repurchase is targeted at $300-$350 million for the year, with no changes expected in the dividend policy [99][100] - **Growth Areas**: - Focus on under-penetrated markets such as Latin America, India, and Southeast Asia, with significant order growth observed in these regions [61][62] - Continued investment in innovation and recurring revenue initiatives is expected to drive future growth [61][64] Conclusion - Ingersoll Rand is positioned for a cautious yet optimistic outlook in 2026, with a focus on organic growth, recurring revenue expansion, and strategic capital allocation. The company is navigating past headwinds effectively and is set to capitalize on emerging opportunities in various global markets.

Financial Performance - Revenues for 2025 were $7,650.9 million, an increase of $415.9 million, or 5.7%, compared to $7,235.0 million in 2024[172]. - The increase in revenues was primarily due to acquisitions of $419.9 million and a favorable impact of foreign currencies of $92.0 million, partially offset by lower organic revenues of $96.0 million[173]. - Gross profit for 2025 was $3,336.3 million, with a gross profit margin of 43.6%, slightly down from 43.8% in 2024[172]. - Operating income for 2025 was $1,144.6 million, representing 15.0% of revenues, down from 18.0% in 2024[172]. - Net income attributable to Ingersoll Rand Inc. for 2025 was $581.4 million, a decrease from $838.6 million in 2024, resulting in a net income margin of 7.7%[172]. - Adjusted EBITDA for 2025 was $2,093.8 million, representing 27.4% of revenues, compared to 27.9% in 2024[172]. - Cash flows from operating activities for 2025 were $1,355.7 million, down from $1,396.7 million in 2024[172]. - Free cash flow for 2025 was $1,220.1 million, compared to $1,247.6 million in 2024[172]. - Interest expense was $253.9 million in 2025, an increase of $40.7 million compared to $213.2 million in 2024, primarily due to an increase in long-term debt[181]. - The provision for income taxes was $219.4 million in 2025, resulting in a 23.5% effective tax rate, compared to $262.5 million and a 23.2% rate in 2024[184]. Acquisitions and Growth - In February 2025, Ingersoll Rand completed the acquisition of SSI Aeration, Inc. for cash consideration of $97.8 million[31]. - In July 2025, the company acquired Termomeccanica Industrial Compressors S.p.A. and its subsidiary Adicomp S.p.A. for $193.2 million[31]. - Segment Orders for the Industrial Technologies and Services segment were $6,119.6 million in 2025, an increase of $413.0 million, or 7.2%, compared to $5,706.6 million in 2024[194]. - Segment Revenues for the Precision and Science Technologies segment were $1,594.5 million in 2025, an increase of $177.6 million, or 12.5%, compared to $1,416.9 million in 2024[199]. - Segment Adjusted EBITDA for the Precision and Science Technologies segment was $478.0 million in 2025, an increase of $59.2 million, or 14.1%, from $418.8 million in 2024[200]. Employee and Operational Insights - The company maintains over 60 key manufacturing facilities and more than 50 service and repair centers globally, employing over 21,000 people[16]. - The company has over 21,000 employees as of December 31, 2025, with approximately 6,100 located in the United States[53]. - The voluntary turnover rate for employees in 2025 was 8.1% for hourly and 7.8% for salaried employees, showing a slight improvement from 2024[54]. - The company is committed to employee engagement, achieving an engagement score of 81 in its Connections Engagement survey, placing it in the top 10% of manufacturing organizations surveyed[62]. - The company has a competitive compensation package designed to foster a culture of ownership among employees[56]. Market and Customer Base - Ingersoll Rand's aftermarket revenue represented 36.5% of total company revenue in 2025[18]. - The company has a diverse customer base across various end-markets, including life sciences, food and beverage production, and clean energy[15]. - The company maintains a diverse customer base, with no single customer accounting for more than 10% of consolidated revenues in 2025[49]. - 58% of the company's revenues for the year ended December 31, 2025, were generated from customers outside the United States[73]. Financial Position and Debt - As of December 31, 2025, the company's total indebtedness was $4,784.7 million, with $2,600 million available under the Revolving Credit Facility and Commercial Paper Program[124]. - The company has the ability to increase borrowing availability under the Revolving Credit Facility by up to $1,000 million[128]. - The projected benefit obligations under pension and other postretirement benefit plans exceeded the fair value of plan assets by $132.5 million, indicating an unfunded status[122]. - The company may face liquidity problems if cash flow is insufficient to service its debt obligations, potentially leading to reduced investments or asset disposals[126]. - The company was in compliance with all debt covenants as of December 31, 2025, with no events of default ongoing[210]. Risks and Compliance - The company is subject to various environmental regulations and has an active environmental management program to comply with these laws[66]. - The company faces risks related to compliance with U.S. and foreign laws, which could significantly impact its financial condition and strategic objectives[102]. - Environmental compliance costs and liabilities are increasing, potentially leading to substantial fines and operational changes[119]. - The company may face reputational challenges if it fails to meet environmental, social, and governance (ESG) goals, which could adversely affect its financial condition[115]. - The company is exposed to interest rate risks due to fixed rate to floating rate swap contracts, which could impact net income and cash flows[129]. Product and Technology Development - The company is investing in the development of new products and technologies, including those incorporating AI, which is critical for maintaining its competitive position[88]. - The company has over 2,000 patents, with significant reliance on technical competence and creativity rather than individual patents for business success[50]. Restructuring and Charges - The company incurred restructuring charges of $51.4 million and $31.2 million in the years ended December 31, 2025 and 2024, respectively[110]. - Restructuring and related business transformation costs rose to $51.7 million in 2025 from $32.3 million in 2024[205].

Core Viewpoint - Ingersoll Rand Inc. has reported its full-year results, prompting a detailed analysis of the company's financial performance and strategic outlook [1]. Financial Performance - The company has released its full-year financial results, which are essential for understanding its operational efficiency and market position [1]. Investment Strategy - The analysis emphasizes a long-term investment horizon, typically ranging from 5 to 10 years, focusing on a balanced portfolio that includes growth, value, and dividend-paying stocks, with a particular inclination towards value investments [1].

Core Insights - Envestnet Asset Management Inc. increased its stake in Ingersoll Rand by 3.7% in Q3, owning 282,175 shares valued at approximately $23.31 million [2] - Institutional investors collectively own 95.27% of Ingersoll Rand's stock, indicating strong institutional interest [3] Institutional Activity - NewSquare Capital LLC raised its holdings by 150.7% in Q2, now owning 341 shares valued at $28,000 [3] - Grey Fox Wealth Advisors LLC and Heartwood Wealth Advisors LLC each purchased new stakes worth approximately $36,000 in Q3 [3] - Westside Investment Management Inc. doubled its holdings by 100% in Q3, now owning 464 shares valued at $39,000 [3] - Gladwyn Financial Advisors Inc. acquired a new stake worth approximately $42,000 in Q2 [3] Insider Transactions - Vicente Reynal sold 440 shares at an average price of $100.00, totaling $44,000, reducing ownership by 0.19% [4] - CAO Michael J. Scheske sold 1,477 shares at an average price of $80.63, totaling $119,090.51, reducing ownership by 10.84% [4] - In the last 90 days, insiders sold 292,917 shares worth $26.75 million, with insiders owning 0.59% of the stock [4] Financial Performance - Ingersoll Rand reported Q4 EPS of $0.96, exceeding estimates of $0.90, with revenue of $2.09 billion, up 10.1% year-over-year [6] - The company has set FY 2026 EPS guidance at 3.450-3.570, with analysts forecasting 3.32 EPS for the current fiscal year [6] Dividend Information - A quarterly dividend of $0.02 per share will be paid on March 26, representing an annualized dividend of $0.08 and a yield of 0.1% [7] Market Performance - Ingersoll Rand's stock opened at $98.43, with a market cap of $38.89 billion, a PE ratio of 67.88, and a 52-week range of $65.61 to $100.96 [5] - The company has a debt-to-equity ratio of 0.47, a quick ratio of 1.51, and a current ratio of 2.16 [5] Analyst Ratings - Citigroup raised its target price from $94.00 to $98.00, maintaining a "buy" rating [8] - Robert W. Baird lowered its target price from $103.00 to $100.00, rating the stock as "outperform" [8] - The average rating for Ingersoll Rand is "Hold" with a consensus price target of $92.13 [8]

Core Insights - Ingersoll Rand reported a 9% year-over-year increase in orders for the full year, with a 6% revenue increase, although organic revenue declined by 1% due to challenging comparisons in the first half of the year [1][3] - The company achieved an adjusted EBITDA of approximately $2.1 billion with a margin of 27.4% and an adjusted EPS of $3.34, reflecting a 2% increase year-over-year [1] - For the fourth quarter, revenue rose by 10% year-over-year, with 3% organic growth, and adjusted EBITDA was $580 million, resulting in a margin of 27.7% [2][7] Financial Performance - Full-year adjusted EBITDA was about $2.1 billion, with an adjusted EBITDA margin of 27.4% [1] - Fourth-quarter adjusted EBITDA was $580 million, with a margin of 27.7%, impacted by tariff pressures and commercial investments [2][7] - Adjusted EPS for the fourth quarter was $0.96, up 14% year-over-year, while the full-year adjusted EPS was $3.34 [1][2] Segment Performance - The Precision & Science Technologies (PST) segment showed strong margin expansion with a Q4 margin of 30.4% and a 19% increase in EBITDA [5][13] - The Industrial Technologies & Services (ITS) segment faced tariff-related margin pressure despite a 9% increase in orders year-over-year [11][12] - Organic orders in the PST segment increased by 1% in Q4, with mid-teens growth in life sciences [13] Recurring Revenue and M&A Activity - Ingersoll Rand surpassed $450 million in recurring revenue in 2025, with a backlog of approximately $1.1 billion [6][8] - The company invested $525 million across 16 acquisitions in 2025, generating about $275 million in annualized inorganic revenue [9] - Management indicated an active acquisition pipeline, including the recent acquisition of Scinomix [9][10] 2026 Guidance - For 2026, the company guided revenue growth of 2.5% to 4.5%, with adjusted EBITDA expected between $2.13 billion and $2.19 billion [15][16] - The guidance assumes stability in the market rather than a broad recovery, with first-quarter organic revenue expected to be flat to slightly down [16] - The company anticipates margin pressure in the first half of 2026 due to tariff impacts, with improvements expected in the second half [16][17]

Core Insights - Ingersoll Rand Inc. (IR) reported fourth-quarter 2025 adjusted earnings of 96 cents per share, exceeding the Zacks Consensus Estimate of 91 cents, marking a year-over-year increase of 14.3% [1] - Total revenues reached $2.09 billion, surpassing the consensus estimate of $2.05 billion, with a year-over-year growth of 10.2% [1] - The company anticipates revenue growth of 2.5-4.5% for 2026, with adjusted earnings projected between $3.45 and $3.57 per share [10][12] Financial Performance - Orders totaled $1.95 billion, reflecting an 8.5% year-over-year increase, with organic orders rising by 1.1% [2] - For the full year 2025, adjusted earnings were $3.34 per share, up 2% year over year, and total revenues were $7.65 billion, indicating a 6% increase [2] - Adjusted EBITDA for Q4 increased by 9% year over year to $580.1 million, with a margin decrease to 27.7% from 28.0% in the previous year [7][4] Segment Analysis - The Industrial Technologies & Services segment generated revenues of $1.67 billion, accounting for 80% of net revenues, with a year-over-year increase of 10.7% [3] - The Precision & Science Technologies segment reported revenues of $419 million, representing 20% of net revenues, with an 8.1% year-over-year increase [5] - Segmental orders for Industrial Technologies & Services increased by 8.9%, while Precision & Science Technologies saw a 6.5% increase [4][6] Balance Sheet & Cash Flow - At the end of Q4, Ingersoll Rand had cash and cash equivalents of $1.25 billion, down from $1.54 billion at the end of December 2024, with long-term debt slightly increasing to $4.78 billion [8] - The company generated net cash of $1.36 billion from operating activities, a decrease of 2.9% year over year, with free cash flow down 2.2% to $1.22 billion [9]

Financial Data and Key Metrics Changes - The company reported a 10% increase in total revenue year-over-year, with organic revenue growth of 3% [9] - Adjusted EBITDA for Q4 was $580 million, with adjusted EBITDA margins at 27.7% [9] - For the full year, adjusted EBITDA was approximately $2.1 billion, with an adjusted EBITDA margin of 27.4% [11] - Adjusted earnings per share for Q4 was $0.96, up 14% year-over-year, while for the full year it was $3.34, a 2% increase [10][11] - Free cash flow for Q4 was $462 million, with total liquidity at $3.8 billion [11] Business Line Data and Key Metrics Changes - In the ITS segment, orders increased by 9% in Q4, with revenue growth of 11% year-over-year [13] - The PST segment saw Q4 orders up 6% year-over-year, with organic orders up 1% [15] - Life science businesses within PST delivered mid-teens organic order growth [15] Market Data and Key Metrics Changes - The Americas region saw low single-digit organic order growth, while EMEA experienced a mid-single-digit decline, and Asia Pacific had low double-digit growth [14] - The company noted positive momentum in the life sciences market, particularly in pharma and biopharma production [25] Company Strategy and Development Direction - The company is focused on enhancing its existing portfolio through disciplined M&A, with a robust acquisition pipeline [6][7] - The recurring revenue initiative exceeded $450 million in 2025, with a backlog of approximately $1.1 billion [5] - The company aims for total revenue growth of 2.5% to 4.5% in 2026, driven by organic growth and M&A contributions [17] Management's Comments on Operating Environment and Future Outlook - Management expressed cautious optimism about improving trends in the market, particularly in life sciences and general industrial sectors [26] - The company remains agile and ready to adapt to changes in the global market landscape, emphasizing resilience and execution [20] - Management highlighted the importance of recurring revenue as a stable component of their business model [26] Other Important Information - The company completed 16 transactions in 2025, investing $525 million, which generated approximately $275 million in annualized inorganic revenue [7] - The Scinomix acquisition in January 2026 is expected to enhance the company's life science strategy [8] Q&A Session Summary Question: What sort of end market trajectory is embedded in the guidance? - Management indicated that the guidance assumes current market conditions continue, with no significant recovery embedded [24][30] Question: Are there any end markets that you're specifically worried about this year? - Management noted that headwinds from RNG, electric vehicles, and photovoltaics are largely behind them, with positive trends in China [30] Question: Can you provide clarity on the seasonality through the year? - Management expects Q1 organic growth to be flat or slightly down, with low single-digit growth anticipated for the rest of the year [34] Question: What are the expectations for cost actions or productivity gains during 2026? - Management confirmed that the guidance includes some productivity and cost actions, with proactive restructuring expected to yield savings [79] Question: Can you elaborate on the acquisition opportunity set? - Management stated that the current pipeline is primarily bolt-on in nature, with potential for larger acquisitions in the future [53] Question: What is the expected organic growth in the life sciences segment for 2026? - Management expressed optimism about continued momentum in life sciences, despite more challenging comps in 2026 [96]