Ingersoll Rand Q2 Earnings Call Highlights

Key Points

• Ingersoll Rand reported solid Q2 growth: Organic revenue rose 4%, organic orders increased 2%, and adjusted EPS grew 7% to $0.86. Revenue reached approximately $2 billion, while adjusted EBITDA rose 2% to $520 million despite margin pressure from China, investments and higher corporate costs.
• Demand accelerated in July, with organic orders up low-double-digit to mid-teens as delayed long-cycle projects began converting to orders. Management raised full-year revenue growth guidance to 4.5%–6.5% and expects results near the high end of its adjusted EPS outlook.
• Growth investments and acquisitions remain active: The company closed its Lone Star Blower acquisition and agreed to acquire Fai Filtri, while maintaining strong liquidity of approximately $3.8 billion, 1.7x leverage and 95% expected free-cash-flow conversion.

Ingersoll Rand NYSE: IR reported second-quarter results marked by organic revenue growth, improved demand trends and a higher full-year revenue outlook, while management said delayed long-cycle projects began converting to orders in July.

Chairman and Chief Executive Officer Vicente Reynal said the company recorded 2% organic order growth, 4% organic revenue growth and 7% growth in adjusted earnings per share during the quarter. Growth was broad-based, with each main geographic region delivering positive organic revenue growth, he said.

Second-quarter orders totaled just over $2 billion, up 5% from a year earlier, including 2% organic growth. Revenue increased 9% to approximately $2 billion, including 4% organic growth. Adjusted EPS rose to $0.86 from the prior-year period.

Adjusted EBITDA increased 2% to $520 million, while adjusted EBITDA margin declined 160 basis points year over year to 25.4%. Chief Financial Officer Vik Kini attributed the margin decline primarily to inflation that has been difficult to offset through pricing in China, growth-related investments in technology and commercial applications, and higher corporate costs.

Corporate costs included a year-to-date true-up of management incentive compensation. Kini said the company does not expect that expense to recur at the same level during the second half, while first-half pricing actions and productivity projects are expected to support sequential margin expansion.

Segment Performance and Demand Trends

The Industrial Technologies and Services, or ITS, segment posted nearly 9% revenue growth, including 4% organic growth, with positive organic revenue growth in all regions. Organic orders were approximately flat, producing a book-to-bill ratio of 1.0.

North American compressor activity remained healthy, with organic compressor orders up high single digits in the region, Reynal said. Globally, compressor orders rose by low single digits. Results were affected by the timing of long-cycle blower and vacuum projects in Europe and delayed project activity in the Middle East, though management emphasized those projects had been delayed rather than canceled.

ITS generated adjusted EBITDA of $435 million and a 26.8% margin. Reynal said margin pressure was largely confined to China, in addition to investments in new technologies and commercial initiatives. He described pricing pressure in China as transitory, citing industry overcapacity, while noting that the company continues to invest in localized technologies and applications there.

The Precision and Science Technologies, or PST, segment reported 11% order growth and 7% organic order growth. Life sciences orders grew at a low-double-digit organic rate, while precision technologies orders increased at a mid-single-digit rate organically. Revenue rose 8%, including 4% organic growth.

PST adjusted EBITDA climbed 15% to $135 million, and its adjusted EBITDA margin expanded 200 basis points to 31.5%. Management said it expects PST margins to improve sequentially in the second half, toward the 32% range or slightly better. Reynal cited biopharma, including the company’s exposure to GLP-1-related activity, as a driver of life sciences momentum.

July Orders and Updated Outlook

Management said order activity accelerated in July. Reynal said the company saw low-double-digit to mid-teens organic order growth through the first four weeks of the month, supported by realization of previously delayed long-cycle orders across its main regions as well as continued short- and medium-cycle strength.

Kini said many of the long-cycle projects have typical durations of six to 18 months and will primarily build backlog for 2027, though some could contribute revenue in the second half of 2026. Management said the long-cycle order recovery was broad-based across end markets including food and beverage, pharmaceuticals, power generation and air separation for semiconductors.

For the full year, Ingersoll Rand raised its revenue growth outlook to 4.5% to 6.5%, an increase of 200 basis points at the midpoint. The guidance assumes 1% to 3% organic growth, roughly 2.5% growth from acquisitions and approximately 1% growth from foreign exchange.

• Adjusted EBITDA guidance was maintained at $2.13 billion to $2.19 billion.
• Adjusted EPS guidance remained $3.45 to $3.57, with management expecting results near the high end of the range.
• Free-cash-flow conversion is expected to be approximately 95%.

The company said its adjusted EBITDA and EPS outlook excludes any benefit from potential IEEPA tariff refunds expected in the second half. Management said it would update guidance if those amounts are materially received.

Acquisitions, Cash Flow and Balance Sheet

Ingersoll Rand announced the closing of its acquisition of Lone Star Blower, a U.S.-based blower manufacturer expected to add approximately $50 million in annual revenue. The company also signed an agreement to acquire Italy-based industrial filter manufacturer Fai Filtri, which is expected to close in the fourth quarter and add about $30 million in annual revenue.

Reynal said both transactions expand the company’s blower or filtration technologies and strengthen its aftermarket presence. The company has 11 additional transactions under letters of intent and a funnel of more than 200 companies, according to management. Reynal said the pending LOI transactions are bolt-on deals generally resembling the size and valuation profile of the acquisitions announced during the call.

Second-quarter free cash flow was $269 million, up about 28% year over year. The company ended the quarter with approximately $3.8 billion of available liquidity, including $1.2 billion in cash and $2.6 billion of revolving-credit-facility capacity. Leverage was 1.7 times.

During the quarter, Ingersoll Rand spent $110 million on acquisitions and returned approximately $248 million to shareholders through share repurchases and dividends. Moody’s upgraded the company by one notch to Baa1 during the quarter.

Kini also said the company reached an agreement for an initial $187.5 million insurance recovery related to its ILC Dover transaction. It collected $25 million in the second quarter and expects to receive the remaining $162.5 million during 2026. The recoveries are excluded from adjusted earnings and are not included in the company’s free-cash-flow guidance, he said.

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.

This instant news alert was generated by narrative science technology and financial data from MarketBeat in order to provide readers with the fastest reporting and unbiased coverage. Please send any questions or comments about this story to contact@marketbeat.com.