Ingersoll Rand Q1 Earnings Call Highlights

Key Points

• Ingersoll Rand reported a “solid” Q1 with adjusted EPS up 7% to $0.77, revenue up 8%, adjusted EBITDA margin of 25.4%, and orders +5% (book-to-bill 1.07), noting an approximately $40 million delay from a few long‑cycle Middle East projects that management calls transitory and has begun recovering.
• Management reaffirmed full‑year 2026 guidance — revenue growth of 2.5%–4.5%, adjusted EBITDA $2.13–$2.19 billion and adjusted EPS $3.45–$3.57 — saying tariffs and the Middle East delays are expected to net out with no material impact to full‑year revenue or EBITDA.
• Capital allocation is M&A‑focused with a “robust” funnel (over 200 targets, 10 LOIs) and the signed acquisition of Fox S.r.l., while the balance sheet (nearly $4 billion in liquidity, leverage well below 2x) supports continued deals, buybacks and dividends.

Ingersoll Rand NYSE: IR executives said the company delivered a “solid start” to 2026 in the first quarter, with adjusted earnings per share rising 7% year-over-year to $0.77 as management pointed to improving short-cycle activity, a stable long-cycle project funnel, and a robust acquisition pipeline.

First-quarter results and order trends

Chairman and CEO Vicente Reynal said the quarter played out largely as expected amid a “continued complexity of the global operating landscape,” with revenue and adjusted EBITDA “finishing in line with expectations” and adjusted EPS growing at a high-single-digit rate. CFO Vikram Kini reported total revenue growth of 8% year-over-year and adjusted EBITDA of $469 million, representing a 25.4% adjusted EBITDA margin.

Orders rose 5% year-over-year, producing a book-to-bill ratio of 1.07, which Kini said was consistent with normal seasonality. However, he noted an approximately $40 million delay in orders tied to “a few long cycle projects,” which he attributed primarily to the conflict in the Middle East. Kini said the company believes the impact is “transitory” and expects the delayed orders to be recovered over the balance of 2026, adding that about a third had already been recovered in April. Excluding that delay, he said organic orders would have been “approximately flat year-over-year.”

Margin pressure versus the prior year was attributed to “the flow-through on organic volume declines, the dilutive impact from tariffs, and continued strategic investments for commercial growth,” according to Kini. Corporate costs were $38 million, while the adjusted tax rate was 19.8%.

Cash flow and balance sheet

Free cash flow in the quarter was $163 million, which Kini described as largely in line with expectations and normal working-capital seasonality. He said the company ended the quarter with nearly $4 billion in total liquidity and leverage “well below 2x,” positioning the balance sheet as “a strategic asset” that supports continued investment.

Kini reiterated that capital allocation priorities remain unchanged: “prioritizes M&A while also maintaining our commitment to share repurchases and quarterly dividends.”

Segment performance: ITS and PST

Reynal reviewed first-quarter segment performance beginning with Industrial Technologies and Services (ITS). ITS orders increased 5% year-over-year and book-to-bill was 1.08x. Organic orders declined 3%, but Reynal said they would have been approximately flat excluding the delayed Middle East orders; on a two-year stacked basis, he said ITS organic orders were up 1%.

ITS revenue grew 7% year-over-year. Adjusted EBITDA margin was 26.7%, down from the prior year, which Reynal attributed to organic volume flow-through, tariff dilution, and continued commercial investments. He said all ITS product lines grew orders on a reported basis except power tools and lifting; within that category, lifting drove the decline, while the core tool business grew organically at mid-single-digit rates, supported by new product launches and short-cycle momentum.

Reynal also highlighted a “large win in carbon capture,” where Ingersoll Rand was selected for a combined vacuum and blower application supporting a proprietary gas separation process, citing the role of the company’s connected technologies.

In Precision and Science Technologies (PST), first-quarter orders rose 6% year-over-year with a 1.04x book-to-bill. Organic orders increased 1%. Reynal said Life Science maintained “robust growth” with a double-digit increase in orders, while the rest of PST was affected by the timing of large projects. Organic revenue increased 4% in the quarter, with both Precision Technologies and Life Science Technologies posting positive organic revenue growth.

PST adjusted EBITDA rose 15% year-over-year to $122 million, and adjusted EBITDA margin expanded 120 basis points, which Reynal said reflected strong operational execution. He also cited a Life Science “win” integrating core ITS vacuum technology into ILC Dover’s bulk powder system solution for a pharmaceutical manufacturer.

M&A pipeline and signed Fox transaction

Reynal emphasized that M&A remains central to Ingersoll Rand’s strategy, describing the acquisition pipeline as “robust” and focused on differentiated technologies and services. He announced the signing of Fox S.r.l., which is expected to close at the end of the month. Reynal described Fox as a manufacturer of hydro-pneumatic accumulators and pulsation dampeners that will enhance the company’s pump technology by absorbing pressure pulses to protect downstream equipment and reduce downtime and maintenance costs.

Reynal said the company has “over 200 companies in our funnel,” with 10 transactions currently at the LOI stage, and that more than 90% of the opportunities are internally sourced. He reaffirmed expectations to acquire 400–500 basis points of annualized inorganic revenue in 2026 and said additional deals are expected to close in the coming months. Later in the Q&A, Reynal added that LOIs are “more on the bolt-on in nature,” while noting one larger potential transaction in the funnel that would carry “a little bit more than a $1 billion purchase price,” though it is not among the current LOIs.

Guidance reaffirmed; tariffs and Middle East delays expected to net out

Management reaffirmed full-year 2026 guidance. Reynal said total company revenue is expected to rise 2.5% to 4.5%, driven by organic growth of about 1% at the midpoint, M&A contribution of approximately 2% (including carryover and the signed Fox transaction), and a foreign exchange tailwind of roughly 0.5%.

Adjusted EBITDA is expected to be $2.13 billion to $2.19 billion, with corporate costs planned at $170 million and incurred evenly per quarter through the remainder of the year. Adjusted EPS is expected to be $3.45 to $3.57, which Reynal said implies approximately 5% growth at the midpoint. Additional assumptions include an adjusted tax rate of about 23%, net interest expense of roughly $230 million, an average share count of approximately 394 million, and free cash flow conversion of about 95% of adjusted net income.

On tariffs, Reynal said the company continues to monitor changes, including recent updates to Section 232 tariffs, and is “nimble” in mitigation actions. He said the company does not currently expect any net tariff and inflation impact to its full-year guidance. In the Q&A, Kini said the various tariff and inflation factors and mitigation actions were “netting out” to be “relatively neutral on a full year basis” based on what has been announced to date, while acknowledging the company is watching how conditions evolve.

Regarding the Middle East order delays, Reynal reiterated that most deferred orders are tied to long-cycle projects and that the company expects recovery through the year, with “no impact on full year revenue or Adjusted EBITDA at this time.” Kini added that there was “no meaningful impact” on shipments or revenue in the first quarter from the Middle East situation and that no material movement is expected in the second quarter, though management is monitoring developments.

Looking at demand conditions, Reynal said short-cycle activity in the U.S. showed “signs of stabilization and improvement,” aligning with ISM readings above 50, while describing the long-cycle funnel as “stable” but with customers and EPCs taking longer to finalize purchase orders. He said projects were not being canceled, framing the trend as timing-related elongation. Reynal also said China continued to outperform the underlying market, with positive organic order growth, while he characterized the overall China market as not shrinking but competitive, with Ingersoll Rand aiming to take share through localized technologies.

About Ingersoll Rand NYSE: IR

Ingersoll Rand is a diversified industrial company that designs, manufactures and services a wide range of equipment and technologies for commercial, industrial and OEM customers. Its product portfolio includes air compressors and compressed air systems, pneumatic and cordless power tools, material handling and lifting equipment, fluid transfer and pumping solutions, and associated aftermarket parts and service offerings. The company's products support applications across manufacturing, construction, transportation, oil and gas, mining and general industrial markets.

Ingersoll Rand sells through a combination of direct sales, distributor networks and service channels, delivering both capital equipment and recurring aftermarket revenue from parts, maintenance and service contracts.

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